The Primary Difference Between a Note Receivable and an Account

question 37

Multiple Choice

The primary difference between a note receivable and an account receivable is:

• A)A note receivable cannot be classified as a current asset.
• B)Borrowers have the option of not paying a note receivable.
• C)An account receivable is more likely to be collected.
• D)A note receivable is evidenced by a written debt instrument.

---

Definitions:

Net Present Value

A financial metric that calculates the value of a series of cash flows by discounting them to the present date, used to assess the profitability of investments.

Present Value Index

A calculation that compares the present value of project cash inflows with the initial investment, used in capital budgeting to evaluate profitability.

Compound Interest

The process of computing interest by including both the primary sum borrowed or deposited and the interest that has previously accumulated over time.

Estimated Cost

A prediction or approximation of the cost of goods or services, based on current and past information, before the actual expense is known.