When a Note Is Accepted to Settle an Open Account

question 238

Multiple Choice

When a note is accepted to settle an open account Notes Receivable is debited for the note's

• A) net realizable value.
• B) maturity value.
• C) face value.
• D) face value plus interest.

---

Definitions:

Inventory Account

An account on a company’s balance sheet that represents the value of the goods that are ready for sale but have not yet been sold.

Consolidation Adjustment

Adjustments made during the preparation of consolidated financial statements to eliminate the effects of inter-company transactions among entities within a single group.

Contingent Liability

A liability that may occur depending on the outcome of a future event.

Business Combination Valuation Entries

Journal entries made in accounting to record the assets and liabilities at their fair values in a business acquisition.