A Note Receivable Is a Negotiable Instrument Which

question 73

Multiple Choice

A note receivable is a negotiable instrument which

• A) eliminates the need for a bad debts allowance.
• B) can be transferred to another party by endorsement.
• C) takes the place of checks in a business firm.
• D) can only be collected by a bank.

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Definitions:

Miller-Orr Model

A financial model used to manage cash balances by setting upper and lower limits on cash reserves within which no financing is needed.

Cash Balance Target

A financial strategy that involves setting a specific amount of cash reserves that a company aims to maintain to meet future expenses, emergencies, or investment opportunities.

Interest Rate

The fee a lender imposes on a borrower for utilizing assets, represented as a percentage of the principal amount.

Collection Float

The time period between when a check is deposited in a bank and when the funds are available, impacting the company's cash flow.