The Accounting Issues for Notes Receivable Are Similar to Those

question 26

Multiple Choice

The accounting issues for notes receivable are similar to those for accounts receivable,with this exception:

• A)Unlike accounts receivable,which are interest-free until they become overdue,notes receivable charge interest from the day they are created to the day they are due (their maturity date).
• B)Unlike notes receivable,which are interest-free until they become overdue,accounts receivable charge interest from the day they are created to the day they are due (their maturity date).
• C)There are no exceptions,they are similar.
• BT: Comprehension

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Definitions:

Receipt of Boot

Tax term referring to non-like-kind property or cash received in an exchange, which may trigger taxable gain.

Like-kind Exchange

A tax-deferred exchange of similar properties under section 1031 of the U.S. Tax Code.

Installment Method

A tax method allowing income recognition from sales or transfers of property over time as the seller receives payments.

Deferred Payments

Payments or income that are delayed to a future date, which can have various tax implications depending on the nature of the deferral and the tax rules applicable.