herts.instructure .com/courses/112195/c uizzes/102792/take Purchasing goods on credit works like interest-free borrowing for the company. Credit-paying customers may be less favoured by suppliers in terms of delivery dates or in gaini access to technical support. A business that buys supplies on credit may incur additional administration and accounting cost Credit-paying customers may have to pay more for their purchases while cash-paying customer may receive discounts for immediate cash settlements. Question 5 Trade receivables are classified as: Current assets Current liabilities Long-term liabilities Long-term assets Gross profit Net profit Capital Rejained earnings

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herts.instructure .com/courses/112195/c uizzes/102792/take Purchasing goods on credit works like interest-free borrowing for the company. Credit-paying customers may be less favoured by suppliers in terms of delivery dates or in gaini access to technical support. A business that buys supplies on credit may incur additional administration and accounting cost Credit-paying customers may have to pay more for their purchases while cash-paying customer may receive discounts for immediate cash settlements. Question 5 Trade receivables are classified as: Current assets Current liabilities Long-term liabilities Long-term assets Gross profit Net profit Capital Rejained earnings

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Current assets

Answer 2

Trade receivables are monetary amounts due from customers for merchandise or services delivered or used but not yet paid for by customers. They are reported on a company's balance sheet in the current assets section. Therefore, when asking about how they are classified, the structure of a balance sheet is instructive. As current assets, these receivables are expected to be realized within the period of one year.Here, the correct classification for 'trade receivables' can be found among the options. However, this is based on basic accounting principles and knowledge—there needs to be understanding that trade receivables, being monies owed to a company by its customers, represent assets, not liabilities, and are typically realized in the short term, which makes them 'current' assets rather than 'long-term' ones.

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