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Multiple Choice
Which of the following is typically required by a lender at the closing of a loan to ensure the collectibility of receivables?
A
A promissory note
B
A bank reconciliation statement
C
An accounts receivable aging schedule
D
A sales invoice
Verified step by step guidance
1
Understand the context of the question: The lender wants to ensure the collectibility of receivables, which means they need a document or process that provides assurance about the borrower's ability to repay the loan.
Review the options provided: A promissory note, a bank reconciliation statement, an accounts receivable aging schedule, and a sales invoice. Each of these serves a different purpose in financial accounting.
Analyze the purpose of each option: A promissory note is a legal document that represents a promise to repay a loan, typically including terms of repayment. A bank reconciliation statement compares the bank's records with the company's records to ensure accuracy. An accounts receivable aging schedule categorizes receivables based on their age to assess collectibility. A sales invoice documents a sale but does not directly ensure collectibility.
Determine which option directly addresses the lender's concern: The lender is likely interested in a document that provides assurance of repayment, which aligns with the purpose of a promissory note.
Conclude that the correct answer is the option that fulfills the lender's requirement for ensuring collectibility of receivables, based on the analysis of the options provided.