Which of the Following Statements Is TRUE

question 89

Multiple Choice

Which of the following statements is TRUE?

• A) Accounts receivable are more liquid than cash.
• B) Notes receivable are always classified as current assets.
• C) Notes receivable usually have longer collection terms than accounts receivable.
• D) Accounts receivable are liabilities.

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Definitions:

Sales Returns

Goods returned by customers post-purchase, leading to a reversal of sales revenue.

Net Sales

Total revenue from sales minus returns, allowances, and discounts, representing the actual sales revenue earned.

Perpetual Inventory System

An accounting system that records inventory transactions in real time, immediately affecting the inventory account with each purchase or sale.

Gross Method

An accounting method for recording purchases of inventory with no immediate recognition of discounts; discounts taken are recorded as income.