With regard to notes receivable, which of the following statements is correct?

Question

Quizplus · Accepted Answer

Notes receivable are a type of formal written contract where the borrower signs a written promise to pay the lender a definite sum at a future date, with interest. This makes option A the correct statement. Option B is incorrect as notes receivable are also known as promissory notes precisely because they require a written promise to pay. Option C is incorrect as notes receivable are actually more formal than accounts receivable since they require a written agreement with specific terms. Option D is incorrect as not all notes receivable require collateral, although some may include collateral as a way to reduce the risk to the lender.

With Regard to Notes Receivable, Which of the Following Statements