Asked by Barbara Circle on Jul 11, 2024
Verified
The practice of placing dishonored notes receivable into accounts receivable keeps only notes that have not yet matured in the Notes Receivable account.
Dishonored Notes Receivable
A note receivable that has not been paid by the maker at its maturity date, resulting in a failure to meet the financial obligation.
Notes Receivable Account
An account on the balance sheet representing claims against others for money, goods, or services to be paid within a specified period.
- Understand the classification and effect of notes receivable on financial disclosures.
Verified Answer
AM
Anwar MarounJul 17, 2024
Final Answer :
True
Explanation :
Placing dishonored notes receivable into accounts receivable removes them from the Notes Receivable account, leaving only notes that are still active or have not yet matured in the Notes Receivable account. This practice helps in maintaining accurate records of current and potentially collectible notes.
Learning Objectives
- Understand the classification and effect of notes receivable on financial disclosures.