A Customer's Written Promise to Pay an Amount of Money

question 23

Multiple Choice

A customer's written promise to pay an amount of money to a business with interest is a(n) ________ of the business.

• A) account receivable
• B) account payable
• C) note receivable
• D) note payable
• E) revenue

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Definitions:

Net Working Capital

Net Working Capital is a financial metric that measures a company's ability to meet its short-term obligations with its short-term assets.

Current Assets

Assets that are expected to be converted into cash or used up within one year or one business cycle, whichever is longer, such as cash, inventory, and receivables.

Cash Flow To Creditors

The amount of cash a company pays to its creditors and bondholders, indicating the flow of cash intended to cover debts.

Operating Cash Flow

Operating cash flow is a measure of the cash generated by a company's normal business operations, indicating its ability to cover operating expenses and invest in its business.