When a Note Receivable Has Been Discounted by a Company

question 103

Multiple Choice

When a note receivable has been discounted by a company

• A) An account called discount on notes receivable is used.
• B) It will be shown as an asset of the company.
• C) It slows the collection process.
• D) It may be shown as a contingent liability in the footnotes.

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Definitions:

Substantial Losses

Significant financial deficits encountered by a business, usually indicating a much greater extent of economic damage beyond normal losses.

Output Contract

An agreement between a producer and a buyer to sell and purchase a specific amount of output at a specified price.

Specialization

The process of focusing efforts on a specific activity, product, or service to gain efficiency or quality improvements.

Economically Beneficial

Describes actions, policies, or activities that result in a positive impact on economic well-being, efficiency, or growth.