Are notes receivable a current asset?
Understand the Problem
The question is asking whether notes receivable are classified as current assets in accounting. Generally, this refers to amounts that are owed to a company that are expected to be collected within a year.
Answer
Notes receivable can be current or non-current assets depending on their due date.
The final answer is: Notes receivable are classified as current assets if they are due within one year; otherwise, they are classified as non-current assets.
Answer for screen readers
The final answer is: Notes receivable are classified as current assets if they are due within one year; otherwise, they are classified as non-current assets.
More Information
Notes receivable reflect the company's legitimate claim for payment from another party based on a promissory note. They are an important part of financial statements as they affect liquidity and financial health.
Tips
A common mistake is failing to separate current and non-current portions of notes receivable, which can lead to inaccurate financial reporting.
Sources
- Notes Receivable Defined: What It Is & Examples - NetSuite - netsuite.com
- Notes Receivable | Corporate Finance Institute - corporatefinanceinstitute.com
- What are Notes Receivable in Accounting? - BooksTime - bookstime.com
