The Grass Is Greener Corporation Is Owed $11,890 from a Client

question 94

Multiple Choice

The Grass is Greener Corporation is owed $11,890 from a client for landscaping.The account is overdue and the client is having difficulty paying.Why might the Grass is Greener Corporation extend a note receivable to the client?

• A)The loan will decrease the net income of the Grass is Greener Corporation for the current accounting period.
• B)The loan will strengthen the Grass is Greener Corporation's legal right to be repaid with interest.
• C)The loan will reduce the tax liability for the Grass is Greener Corporation.
• D)The loan will eliminate any doubts of collection of the amount due.

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Definitions:

Rent Expense

The cost incurred for leasing premises or equipment for business operations, typically recognized as an expense.

Liability

A financial obligation or amount owed by a business to another entity, typically categorized as current or long-term.

Residual Value

An asset's expected monetary value at the end of its operational lifespan.

Retired

The status of an individual who has left their professional career, often due to age or reaching financial independence that allows them not to work actively.