Assuming a note was written to settle an open account, the entry for receipt of the note would require the receiving company to

Question

Quizplus · Accepted Answer

When a note is received to settle an open account, it is considered as a promise to pay. Therefore, the receiving company should credit Accounts Receivable to remove the amount owed by the customer and debit Notes Receivable to acknowledge the note. So, the correct answer is to debit Notes Receivable and credit Accounts Receivable. Neither of the other options is correct in this situation.

Assuming a Note Was Written to Settle an Open Account