When referring to a note receivable or promissory note,
A) the maker is the party to whom the money is due
B) the note is not considered a formal credit instrument
C) the note cannot be factored to another party
D) the note may be used to settle an accounts receivable

Question

Quizplus · Accepted Answer

A note receivable or promissory note can indeed be used to settle an accounts receivable, where the debtor issues a promissory note to the creditor, promising to pay the amount owed at a future date under specified terms. This formalizes the debt and can provide the creditor with a more secure claim.

When Referring to a Note Receivable or Promissory Note