A Company's Formal Promise to Pay (In the Form of a Promissory

question 94

Multiple Choice

A company's formal promise to pay (in the form of a promissory note) a future amount is a(n) :

• A) Account receivable.
• B) Unearned revenue.
• C) Note payable.
• D) Prepaid expense.
• E) Credit account.

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Definitions:

Government Bonds

Debt securities issued by a government to finance its expenditure, promising to pay a specified interest rate and to return the principal at maturity.

Groceries

Items of food and other goods sold by a grocer or supermarket, typically for household consumption.

Gasoline

A flammable liquid derived from petroleum, predominantly used as fuel in internal combustion engines.

Flow Variable

A quantity that is measured over a specified period of time, contrasting with stock variables which are measured at one specific time.