A Short-Term Note Payable

question 131

Multiple Choice

A short-term note payable:

• A) Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.
• B) Is a contingent liability.
• C) Is an estimated liability.
• D) Is not a liability until the due date.
• E) Cannot be used to extend the payment period for an account payable.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for, typically recorded as an asset on the balance sheet.

Accounts Payable

An obligation to a lender recorded on an open account, typically relating to the acquisition of goods and services.

Creditor

A creditor is an entity (person or institution) that lends money or extends credit to another entity, with the expectation of being repaid in the future, possibly with interest.

Financial Accounting Ethics

Principles and standards guiding ethical behavior and practices in the field of financial accounting, focusing on honesty, transparency, and integrity.