When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected,what type of short-term note is desirable and secured by a government's power to tax?

Question

Quizplus · Accepted Answer

A Tax Anticipation Note Payable is desirable in this situation because it is secured by the government's power to tax. This means that if necessary, the government can use tax revenues to pay off the note. It is also specifically designed to provide cash flow for short-term expenses, such as payroll and other liabilities, that must be paid before cash is collected. The other choices, Tax Budget, Tax Relief, and Tax Encumbrances Notes, do not provide the same level of security or flexibility in terms of covering short-term expenses.

When Payrolls and Other Liabilities Are Incurred and Must Be