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

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Which of the following is a true statement about the use of a promissory note?

A promissory note is classified as an account receivable.

A promissory note is a written promise to pay a specified amount of money at a future date.

A promissory note does not require the payment of interest.

A promissory note is only used for recording cash sales.

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Verified step by step guidance

Understand the concept of a promissory note: A promissory note is a financial instrument that represents a written promise by one party (the maker) to pay a specified amount of money to another party (the payee) at a future date. It is not classified as an account receivable but rather as a note receivable when held by the payee.

Evaluate the first statement: 'A promissory note is classified as an account receivable.' This is incorrect because a promissory note is recorded as a note receivable, not an account receivable, in the books of the payee.

Evaluate the second statement: 'A promissory note is a written promise to pay a specified amount of money at a future date.' This is correct because it accurately describes the nature of a promissory note.

Evaluate the third statement: 'A promissory note does not require the payment of interest.' This is incorrect because most promissory notes include an interest component, which compensates the payee for the time value of money.

Evaluate the fourth statement: 'A promissory note is only used for recording cash sales.' This is incorrect because promissory notes can be used in various transactions, including credit sales, loans, and other financial agreements, not just cash sales.