Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Notes Receivable

Financial Accounting

7. Receivables and Investments

Notes Receivable

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Multiple Choice

Which of the following contains a borrower's personal promise to pay a debt?

A purchase order

A sales invoice

An accounts payable

A note receivable

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Understand the concept of a 'note receivable': A note receivable is a financial instrument that represents a borrower's written promise to pay a specific amount of money to the lender at a future date, often including interest.

Differentiate between the options provided: A purchase order is a document issued by a buyer to a seller indicating the items they wish to purchase. A sales invoice is a document issued by a seller to a buyer detailing the goods or services provided and the amount owed. Accounts payable refers to the amounts a company owes to its suppliers for goods or services received.

Recognize that none of the other options (purchase order, sales invoice, accounts payable) involve a borrower's personal promise to pay a debt. These are transactional documents or liabilities, not formal promises.

Identify that a note receivable specifically contains the borrower's personal promise to pay a debt, making it the correct answer in this context.

Conclude that understanding the nature of financial instruments like notes receivable is essential for distinguishing them from other accounting documents or terms.