Question

When is a receivable classified as a 'trade receivable'?

a.

When it is held primarily for the purpose of being traded.

b.

When it is due to be settled within twelve months after the reporting date.

c.

When it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.

d.

When it is expected to be realized in the company's normal operating cycle.

Posted under IC 89 Management Accounting

Answer: (c).When it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. Explanation:A receivable is classified as a 'trade receivable' if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.

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