Choose the Correct Statement About Recording the Discounting (With Recourse)

Choose the correct statement about recording the discounting (with recourse) of a customer's four-month note with a financial institution. Assume the note is held for a month before it is discounted.

A) The notes receivable discounted account represents both a contra-notes receivable and a contingent liability.
B) There is only one way to disclose the contingent liability.
C) The gain or loss on discounting equals the difference between the proceeds and the face value of the note.
D) The financial institution bases its discount (fee) on the face value of the note.