IBM signs an agreement to lend one of its customers $200,000 to be repaid in one year at 5.5% interest.IBM would record this loan as:
A)notes payable.
B)accounts receivable.
C)notes receivable.
D)unearned revenue.

Question

Quizplus · Accepted Answer

IBM would record the loan as notes receivable because they are lending money to a customer who will repay it in the future, and the loan has an interest rate attached to it. Notes payable would be used if IBM had borrowed money from someone else instead, while accounts receivable refers to money that IBM is owed by its own customers. Unearned revenue would apply if IBM had received payment from a customer in advance but had not yet provided the goods or services.

IBM Signs an Agreement to Lend One of Its Customers