The Debt Created by a Business When It Makes a Purchase

question 107

Multiple Choice

The debt created by a business when it makes a purchase of inventory on account is a(n) :

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

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Definitions:

Dishonored

Dishonored describes a financial instrument, such as a check or promissory note, that has been refused acceptance or payment.

Promissory Note

A financial instrument involving a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Presentment

The act of formally presenting a document, such as a check or draft, for acceptance or payment.

Dishonored

Refers to a financial instrument (check, promissory note) that is not accepted or paid upon presentation.