Asked by
Gerald Castillo
on Nov 14, 2024
Verified
Which of the following is not true regarding promissory notes?
A) Promissory notes are not shown at carrying amount on the statement of financial position.
B) Promissory notes are usually interest-bearing.
C) Promissory notes give a stronger legal claim to the holder than accounts receivable.
D) Promissory notes are frequently accepted from customers who need to extend the payment of an outstanding account receivable.
Promissory Notes
Written promises to pay a specified sum of money to a named party on demand or at a determined future date.
Carrying Amount
The book value of assets and liabilities reported on the balance sheet, calculated as the original cost less any depreciation, amortization, or impairment costs.
Interest-Bearing
Referring to a financial instrument or account that generates interest income over time.
- Contrast notes receivable and accounts receivable in terms of their legal positions and the manner in which they are represented in financial statements.
Verified Answer
LP
Learning Objectives
- Contrast notes receivable and accounts receivable in terms of their legal positions and the manner in which they are represented in financial statements.