Homework 1 - Allowance Method

Which of the following​ statements, regarding notes​ receivable, is​ incorrect? A. Notes receivable usually have longer terms than accounts receivable. B. Notes receivable are sometimes called promissory notes. C. A notes receivable is a written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future. D. All notes receivable are considered​ long-term assets.

D. All notes receivable are considered​ long-term assets.

Which of the following is included in the category of other​ receivables? A. accounts receivable B. notes receivable C. investments D. interest receivable

D. interest receivable

Each receivable transaction involves two parties—the one who takes on the obligation and the one who will collect the cash. -- True |False

True

Which of the following statements is​ true? A. Accounts receivable are more liquid than cash. B. Notes receivable usually have longer collection terms than accounts receivable. C. Notes receivable are always classified as current assets. D. Accounts receivable are liabilities.

B. Notes receivable usually have longer collection terms than accounts receivable.

Which of the following statements regarding receivables is​ correct? A. A receivable is the right to pay cash in the future from a current receivable transaction. B. Receivables occur when a business loans money to another party. C. A receivable occurs when a business makes a cash sale of goods or services to another party. D. Each receivable transaction involves three parties.

B. Receivables occur when a business loans money to another party.

A receivable is a liability because it represents a right to receive cash in the future. -- True | False

False

A receivable occurs when a business sells goods or services to another party on account. -- True | False

True