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O No, because it represents debt.

O No, because it represents debt.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Georgy Porgy wanted to buy a bottle of orange juice from his room-mate Ricardo, but had no currency, so he wrote a note on excellent quality paper saying "IOU $1 Georgy Porgy," which Ricardo accepted. Ricardo owed Suzanna Banana $1, and she accepted the IOU note. That IOU note circulated, as everybody knew Georgy Porgy and accepted the note in payment for debts and goods. It is still circulating ten years later. Is the IOU note money? O No, because it is not a federal reserve note or other official currency. O Yes, it has become a medium of exchange and final means of payment, as nobody has wanted to return the note to Georgy. O No, because it represents debt. O Yes, because all IOU notes are money.
Transcribed Image Text:Georgy Porgy wanted to buy a bottle of orange juice from his room-mate Ricardo, but had no currency, so he wrote a note on excellent quality paper saying "IOU $1 Georgy Porgy," which Ricardo accepted. Ricardo owed Suzanna Banana $1, and she accepted the IOU note. That IOU note circulated, as everybody knew Georgy Porgy and accepted the note in payment for debts and goods. It is still circulating ten years later. Is the IOU note money? O No, because it is not a federal reserve note or other official currency. O Yes, it has become a medium of exchange and final means of payment, as nobody has wanted to return the note to Georgy. O No, because it represents debt. O Yes, because all IOU notes are money.
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