Asked by olivia woods on Jul 06, 2024
Verified
Sarah borrowed $2,200 from Cassandra. Sarah promised in writing that she would repay the money to Cassandra on June 18, 201X. At the time of the loan, Sarah records the transaction as a(n) :
A) Accounts Receivable.
B) Accounts Payable.
C) Note Payable.
D) Note Receivable.
Note Payable
A formal written agreement to repay a borrowed amount of money, including terms such as interest rate and maturity date.
Accounts Payable
The amounts owed by a business to its suppliers or creditors for goods and services received but not yet paid for.
- Record transactions involving promissory notes correctly in financial statements.
Verified Answer
GH
Gabrielle HaynesJul 13, 2024
Final Answer :
C
Explanation :
Since Sarah is the borrower, she has the obligation to repay the money, which is recorded as a Note Payable on her books. This reflects her written promise to pay back the loan to Cassandra by a specific date.
Learning Objectives
- Record transactions involving promissory notes correctly in financial statements.