Question

Business transactions on the books representing unsecured accounts receivable where credit was extended without a formal written contract are called:

A) Liabilities
B) Equity
C) Notes payable
D) Trade accounts receivable

Answer 1

Unsecured accounts receivable without a written contract are known as Trade accounts receivable. In accounting, assets and liabilities are recorded in a T-account, with assets on the left and liabilities on the right.

Step-by-step explanation:

Business transactions that are recorded as unsecured accounts receivable, where credit was extended without a formal written contract, are called Trade accounts receivable. In a banking context, when looking at a T-account, the assets would be things like loans made by the bank or U.S. Treasury bonds purchased by the bank, whereas liabilities are what the bank owes, such as customer deposits. A bank's net worth, also known as bank capital, is calculated as the total assets minus total liabilities and is included on the liabilities side to balance the T-account.