Principles of Investment Practice Exam 2025 – Complete Study Resource

Question: 1 / 400

In the context of investments, what does the term 'receivables' refer to?

Investments in stocks and bonds

Payments owed to a company

In the context of investments, the term 'receivables' specifically refers to payments owed to a company. This typically involves amounts that customers or clients have agreed to pay for goods or services provided on credit but have not yet settled. Receivables represent an asset for the company, as they indicate future cash inflows that the business expects to collect.

Understanding receivables is crucial for assessing a company’s liquidity and cash flow, as they can significantly impact a firm’s ability to meet its short-term financial obligations. Evaluating the quality and collectibility of receivables helps investors gauge how effectively a company is managing its credit policies and customer relationships.

The other choices do not accurately represent the definition of receivables, as they pertain to different financial concepts that do not encapsulate the definition.

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Funds that have been withdrawn from an account

Assets held for investment purposes

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