When a Note Is Written to Settle an Open Account

question 19

True/False

When a note is written to settle an open account, no entry is necessary.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Sales

The total amount of goods or services sold by a company, contributing to its revenue.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not affect future business decisions.