On a Balance Sheet, What Is the Preferable Presentation of Notes

question 21

Multiple Choice

On a balance sheet, what is the preferable presentation of notes or accounts receivable from officers, employees, or affiliated companies?

• A) As trade notes and accounts receivable if they otherwise qualify as current assets
• B) As assets but separately from other receivables
• C) As offsets to capital
• D) By means of notes or footnotes

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Definitions:

FASB

The Financial Accounting Standards Board, an organization responsible for establishing and improving accounting standards within the United States.

Auditing Experience

The professional knowledge and skill gained through performing audits, typically used by accountants and auditors to ensure financial statements are accurate and comply with laws and regulations.

Independence

The state of being free from external control or influence, often related to auditor's neutrality.

Conceptual Framework

A set of fundamental principles and objectives that guides the development of accounting standards and practices.