Since a dishonoured note is no longer negotiable, the notes receivable account must be reduced by

Question

Quizplus · Accepted Answer

When a note is dishonoured, it means that the debtor has failed to pay the amount due on the note. As a result, the note is no longer negotiable and the creditor cannot recover the amount due from the debtor. The only option left for the creditor is to reduce the notes receivable account by the face value of the note, which is the amount that is now uncollectible. The accrued interest is not considered in this case, as it is not recoverable once the note has been dishonoured. Therefore, the best choice is B, which states that the notes receivable account must be reduced by the face value of the note.

Since a Dishonoured Note Is No Longer Negotiable, the Notes