Accounting for long-term credit sales transactions utilizing notes receivable
A)ignores interest unless an interest rate is specified in the note.
B)makes it difficult to assess the degree to which a company's overall earnings are due to profitable credit sales versus profitable customer financing.
C)achieves a clear separation between income from credit sales and interest earned.
D)is controversial because it necessitates use of an assumed interest rate.

Question

Quizplus · Accepted Answer

Accounting for long-term credit sales transactions utilizing notes receivable achieves a clear separation between income from credit sales and interest earned. This helps in evaluating the profitability of the credit sales separately from the interest earned.

Accounting for Long-Term Credit Sales Transactions Utilizing Notes Receivable