What represents balances due from brokers when a security has been sold, but the proceeds have not been received?

Question

Options

• APayable for securities
• BReceivable for securities
• CSecurity balancing
• DPremium security

• A
  3% (1)
• B
  77% (24)
• C
  13% (4)
• D
  6% (2)

Explanation

Receivable for securities (B) is correct because a "receivable" in accounting represents money owed to an entity - when a broker sells a security on your behalf but hasn't yet delivered the cash proceeds, that outstanding amount is recorded as a receivable (an asset you're owed).

Why the others are wrong:

• A (Payable for securities): A payable is money you owe to someone else - the opposite direction; this would apply when you've bought securities but haven't paid yet.
• C (Security balancing): This is not a standard accounting term; it's a distractor with no recognized meaning in brokerage accounting.
• D (Premium security): "Premium" refers to the price of an option contract or the amount above par value, not to unsettled trade proceeds.

Memory tip: Think of it from your perspective as the seller - the broker owes you money, so you have a right to receive it. "I sold, so I'm owed → Receivable." If you had bought instead, you'd owe the broker → Payable.

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