Question

All of the following are characteristics of notes receivable except, notes receivable: Multiple Choice

A. are generally for a longer period than a regular accounts receivable.

B. are used by most businesses for very large amounts and are therefore almost always shown separately on the financial statements.

C. the maker is the person who promises to pay the note at maturity.

D. generally require the maker to pay interest on the receivable.

E. are usually evidenced by a more formal agreement called a promissory note.

Answer 1

Option E is correct option.

Explanation:

Promissory note is just like another name for note recievable or note payable. For the borrower, a promissory note is note payable and vice versa for lender.

Option A is correct as notes recievable are for generally longer period

Option B is correct, as it is generally for higher amount & is shown under current assets seperately.

Option C is correct, the borrower issues the note

Option D is correct, as the borrower will have to pay some interest in most of the cases, when note matures.