Notes receivable are reported on the statement of financial position following accounts receivable because notes receivable give the payee a weaker legal claim to assets than accounts receivable.

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This statement is false. Notes receivable are typically reported separately from accounts receivable on the statement of financial position because notes represent claims on specific amounts of money, while accounts receivable represent claims on a group of customers that owe the company money. The legal claim of a note receivable is typically stronger than that of an account receivable because the note includes a written agreement and typically includes interest and a specific repayment date.

Notes Receivable Are Reported on the Statement of Financial Position