Question

Which of the following statements about a note receivable is true?

A : It can only be collected by a bank.
B : It takes the place of checks in a business firm.
C : It eliminates the need for an allowance for doubtful accounts.
D : It can be transferred to another party by endorsement.

Answer 1

Answer: The correct answer is "D".

Explanation: The TRUE statement abaout a note receivable is "D", it can be transferred to another party by endorsement.

Note Receivables are created when customers sign documents known as promises of payment and agree to pay the face value of the document, along with interest, on a given date.

These can only be transferred to another person through the endorsement.