Which item is a financial asset representing money owed to the business by customers?

• A. Accounts receivable
• B. Notes receivable
• C. Cash on hand
• D. Inventory

Answer: (B)

Money owed to the business by customers that will be collected is a receivable, a type of financial asset. The option that best fits this description is notes receivable, because it represents a written promissory note from a customer agreeing to pay a specific amount by a future date. This written instrument makes the expected payment more formal and typically carries interest, which distinguishes it from other receivables.

Cash on hand is actual cash the business has, not an receivable. Inventory consists of goods the business holds for sale, not money owed by customers. Accounts receivable also represents money owed by customers from sales on credit, but the prompt emphasizes a note or promissory instrument, which is specifically notes receivable.