Notes receivable is defined as what?

• A. A handwritten IOU from a customer for services rendered
• B. A written promise by a customer to pay a sum of money to the business at a future date
• C. An obligation of the business to pay a supplier in the future
• D. A cash receipt for services rendered

Answer: (B)

Notes receivable is a written promise from a customer to pay a specific amount to the business at a future date. This formal instrument turns the amount owed into an asset for the seller, and it often includes terms like the due date and sometimes interest. This distinguishes it from an informal IOU, which isn’t a formal promissory note with defined terms, and from notes payable, which are obligations payable by the business to others. A cash receipt shows money already collected and does not represent an amount owed.