The lender of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

Question

Quizplus · Accepted Answer

When a lender issues a note, they will record it as an asset (note receivable) on their balance sheet. As the borrower makes payments on the note, the lender will recognize interest revenue on their income statement. Therefore, both the note receivable and interest revenue are recorded on the lender's financial statements.

The Lender of a Note Recognizes a Note Receivable on the Balance