Explanation Note receivable: Note receivable refers to a written promise by the debtor for the amounts to be received within a stipulated period of 60-90 days or longer time. This written promise is issued by a debtor or, a borrower to the lender or, creditor. Notes receivable is an asset of a business. All revenues and expenses account must be adjusted at the end of each fiscal period, as per accrual accounting principle. Hence, interest revenue earned from the note receivable for 1 year must be recorded at the end of the December 31, 2015. Interest revenue for 1 year would be ( $ 10 , 000 × 10 % ) $1,000. Hence, $1,000 of interest revenue would be recorded in 2015

Loose-leaf for Fundamentals of Financial Accounting with Connect

5th Edition

ISBN: 9781259619007

Author: Fred Phillips Associate Professor

Publisher: McGraw-Hill Education

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Chapter 8, Problem 7MC

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The effect of note receivable.

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The effect of note receivable.

Solution Summary: The author explains that note receivable is a written promise by the debtor or borrower to the lender or, creditor. All revenues and expenses account must be adjusted at the end of each fiscal period.

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