The Account Title Used for Recording a Written Promise That

question 20

Multiple Choice

The account title used for recording a written promise that a customer will pay the business a fixed amount of money and interest by a certain date in the future is ________.

• A) Prepaid Note
• B) Notes Payable
• C) Notes Receivable
• D) Accounts Receivable

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Definitions:

Direct Method

A cash flow statement presentation that itemizes the major categories of gross cash receipts and payments, providing a clearer view of a company's cash flow from operating activities.

Ending Inventory

The total value of a company's merchandise, raw materials, work-in-progress, and finished goods at the end of an accounting period.

Ceiling Constraint

In accounting, the maximum value that inventory can be reported at, ensuring that assets are not overstated.

Floor Constraint

A limitation in inventory accounting that prevents the value of inventory from being reported below a certain level.