What is the distinguishing characteristic between accounts receivable and notes receivable?
A)Accounts receivable are usually current assets,while notes receivable are usually long-term assets.
B)Accounts receivable require payment of interest if not paid within the usual credit terms.
C)Notes receivable result from credit sale transactions for merchandising companies,while accounts receivable result from credit sale transactions for service companies.
D)Notes receivable result from a written promise to pay within a specified amount of time.

Question

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The distinguishing characteristic between accounts receivable and notes receivable is that notes receivable result from a written promise to pay within a specified amount of time, while accounts receivable are simply owed to the company by its customers for goods or services rendered. Option A is not always true as notes receivable may also be short-term; Option B is not true as interest may also be charged on accounts receivable; Option C is not true as both types of companies may have both types of receivables.

What Is the Distinguishing Characteristic Between Accounts Receivable and Notes