If a Note Receivable Was Issued at an Amount That

question 43

Multiple Choice

If a note receivable was issued at an amount that is less than its face value, then

• A) the note was issued at a premium.
• B) the note was issued at a discount.
• C) the note's stated rate was the same as the prevailing market rate of interest.
• D) it must be a zero-interest-bearing note.

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Definitions:

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, often considered risk-free investments.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.

DSO

Days Sales Outstanding, a financial metric that measures the average number of days that a company takes to collect payment after making a sale.

Seasonal Sales

Sales that fluctuate during certain times of the year due to seasonal factors, such as holidays or weather changes.