When a company discounts its notes receivable at a bank, the common practice is to record the discounted notes in a(n)

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When a company discounts its notes receivable at a bank, it is common practice to record the discount (the interest charged by the bank for the service of providing cash before the note's maturity) in a contra-asset account. This account is used to reduce the value of the notes receivable on the balance sheet, reflecting the cost of obtaining cash early.

When a Company Discounts Its Notes Receivable at a Bank