What are monies to be received by the company from customers called?

Prepare for the Financial Statement Analysis Test. Study with interactive flashcards and multiple choice questions, each equipped with explanations and hints. Ensure your success!

The correct choice pertains to the term "receivables," which refers to amounts that a company is owed by its customers for goods sold or services rendered. When a company sells products on credit, it records these amounts as receivables on its balance sheet, which represent a legal claim for future payment.

Receivables are critical for assessing a company's liquidity and cash flow situation, as they indicate potential income that will be realized when customers pay their invoices. This term encompasses all types of amounts due from customers, including accounts receivable, which are typically expected to be collected within a year.

The other terms mentioned are distinct from receivables: accounts payable refers to obligations the company must pay to its suppliers, deferred revenue represents payments received in advance for services or goods to be delivered in the future, and trade payables relate specifically to amounts owed to suppliers for purchases made in the normal course of business. Each of these categories involves obligations or liabilities rather than amounts due to the company, further clarifying why "receivables" is the appropriate term for money expected from customers.

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