When a Company Accepts a Promissory Note from a Customer

question 79

True/False

When a company accepts a promissory note from a customer who cannot pay an accounts receivable,the company will credit Notes Receivable.

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Definitions:

Nominal Cost

The original cost of an asset or investment, not adjusted for inflation or other factors affecting its current value.

Trade Credit

An arrangement to buy goods or services on account, that is, without making immediate cash payment, usually evidenced by an invoice.

Nominal Annual Cost

The stated annual cost of borrowing or investing, without adjusting for the compounding of interest or for inflation.

Non-Free Trade Credit

Credit arrangements that come with conditions or costs, unlike free trade credit which has no interest or fees for a certain period.