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25 November, 04:22

When a company receives an interest-bearing note receivable, it will

a. debit Notes Receivable for the face value of the note

b. credit Notes Receivable for the maturity value of the note

c. debit Notes Receivable for the maturity value of the note

d. credit Notes Receivable for the face value of the note

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Answers (1)
  1. 25 November, 04:28
    0
    a. debit Notes Receivable for the face value of the note

    Explanation:

    The note will generate interest over time, but at the moment of receiving the note, it hasn't accrued any interest, so we have to only record for the value of the note today.

    Also this note represent the right to claim cash from the person who sign the note, so it is an asset for the company.

    Asset increase from debit side, so the Note Receivable will be debited.
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