Multiple Choice QuestionIf you use your Kohl's credit card to purchase a new outfit, you represent a(n) _____ on Kohl's balance sheet.Multiple choice question.accounts receivableaccounts payablefixed assetlong-term debt
Question
Multiple Choice QuestionIf you use your Kohl's credit card to purchase a new outfit, you represent a(n) _____ on Kohl's balance sheet.Multiple choice question.accounts receivableaccounts payablefixed assetlong-term debt
Solution
The correct answer is "accounts receivable".
Here's why:
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When you purchase something on credit, the company (in this case, Kohl's) is essentially lending you the money to make the purchase. You promise to pay them back later.
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This promise to pay back is considered an asset to the company, because it's money that they expect to receive in the future.
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On a balance sheet, this type of asset is categorized as "accounts receivable".
So, if you use your Kohl's credit card to purchase a new outfit, you represent an "accounts receivable" on Kohl's balance sheet.
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