O The principal amount of a noninterest-bearing note is its future cash flows discounted at its effective interest rate The face amount of a noninterest-bearing note may include both the principal and interest as a single amount to be paid back at maturity date Noninterest bearing is not a descriptive designation for this type of note because such notes do bear interest The effective rate on a short-term noninterest-bearing note, with a specified term, cannot be determined unless it is given on the face of the note
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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