James borrowed $950 from Tracy.James promised in writing that he would repay the money to Tracy on May 13,201X.At the time of the loan,Tracy records the transaction as a(n):
A)Accounts Receivable.
B)Accounts Payable.
C)Promissory Note Receivable.
D)Promissory Note Payable.

Question

Quizplus · Accepted Answer

A promissory note is a written promise to pay back a specific amount of money at a specific time. In this case, James promised to repay $950 to Tracy on May 13, 201X, so it is recorded as a Promissory Note Receivable for Tracy. Accounts Receivable and Accounts Payable are used for transactions between businesses or individuals, where one party owes the other party money for goods or services. Promissory Note Payable would be used if Tracy had borrowed money from James instead.

James Borrowed $950 from Tracy