Interest revenue must be reported for a note receivable that is outstanding at the end of the accounting period.

Question

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Interest revenue must be recognized for any outstanding note receivable at the end of the accounting period, as it represents income earned by the creditor during that period. This is in accordance with the accrual basis of accounting, which requires revenue to be recognized when earned, regardless of when payment is received.

Interest Revenue Must Be Reported for a Note Receivable That