When a company receives an interest-bearing note receivable, it will
A)debit Notes Receivable for the maturity value of the note.
B)credit Notes Receivable for the maturity value of the note.
C)debit Notes Receivable for the face value of the note.
D)credit Notes Receivable for the face value of the note.

Question

Quizplus · Accepted Answer

When a company receives an interest-bearing note receivable, it debits Notes Receivable for the face value of the note, which is the principal amount, not the maturity value. The interest is recorded separately as it accrues.

When a Company Receives an Interest-Bearing Note Receivable, It Will