What type of receivables result from sales transactions? A. Other receivablesB. Non-trade receivablesC. Trade receivablesD. Long-term receivables

Hello there!

Your answer would be C). Trade receivables

The reason why Trade receivables would be the correct answer because when a sale transaction occurs, it is causing a Trade receivable, this is word to describe an Account Receivable. A trade receivable is when the business charges the customer for the item that they bought. This is the same definition for an Account receivable.

For example, lets say we are at an electronics store, and a customer comes up to the register and wants to buy a phone charger, and the phone charger costs $5, the business will make a trade receivable, by charging the customer $5 for the item. This would be the same process that would happen in an Account Receivable. This would usually be shown as an asset.

Let's word this out differently so it makes more sense. The business is trading with the customer by giving the customer the product, while the customer trades with them the amount the product costs.

Lets dive in to why the other answer choices are incorrect:

Answer choice A). Other receivables is incorrect because this answer choice is not being very specific, and from a sales transaction, the business would be getting back a specific receivable. This is the reason why this answer choice would be eliminated.

Answer choice B). Non-trade receivables is incorrect because the receivables that the business is getting back form the customer is trading. If the receivables were non-tradable, the business wouldn't even do any business because they don't want to have receivables that can't be traded afterwards. This is the reason why this answer choice would be eliminated.

Answer choice D). Long-term receivables is incorrect because the receivables that are the result of a sales transaction would not be long-term, they could come and go real quickly. This is the reason why this answer choice would be eliminated.