1. A notes receivable is a promissory note held by a company from another company, entity, or person as a promise to pay a certain sum or sums of money in the future. Thus, for the bearer of the note, the notes receivable is a/an Current Asset (asset/liability/etc.) account with a normal Debit balance. It is a Temporary (temporary/permanent) account. 2. What are the three main scenarios that give rise to a notes receivable? a. ________________________________________ b. ________________________________________ c. ________________________________________ 3. What is the difference between a short-term notes receivable and a long-term notes receivable in terms of time? Short-term notes are notes due within 12 months or less and if its more, it is classified as a long-term. 4. Short-term notes receivable is initially reported on the balance sheet at their net amount to be collected, then reported on each subsequent balance sheet date at ____________________ ____________________ ____________________. Long-term notes receivable is initially reported on the balance sheet at ____________________ ____________________, then reported on each subsequent balance sheet date at ____________________ ____________________. 5. For a long-term notes receivable, theoretically, any revenue occurring after the sale or loan origination is ____________________ ____________________. Thus, long-term notes receivable are ____________________ to ____________________ ____________________ at the point of sale/loan origination. 6. If a long-term notes receivable were to be reported at face value at the point of sale or loan origination, the note (as well as the revenue) would be ____________________ (overstated/understated). 7. There are two types of notes receivables: a. _____________________________________ b. _____________________________________: for this type of note, interest is imputed. 8. How to present value an interest-bearing long-term notes receivable: a. First, present value the ____________________ ____________________ due at maturity as a ____________________ ____________________. b. Next, present value the periodic ____________________, either payable or imputed, as an ____________________. c. Lastly, add them both together to get the present value. 9. How to present value a zero-interest-bearing long-term notes receivable: simply present value the ____________________ ____________________ due at maturity as a ____________________ ____________________. 10. The difference between a notes receivables face value and its present value is called the ____________________ _______________ ____________________ ____________________. It is a ____________________ account with a normal ____________________ balance. It is amortized over the life of the note using the ____________________ ____________________ method. 11. Over the life of a notes receivable, the amortization of the discount on notes receivable ____________________ (increases/decreases), while the balance of the discount on notes receivable ____________________ (increases/decreases). 12. Over the life of a notes receivable, its ____________________ ____________________ approaches its ____________________ ____________________, until they equal one another on the maturity date. 13. If at any point in time over the life of a notes receivable, it becomes probable that the note maker will be unable to pay the full amount of the note due, the note is considered to be ____________________. The note bearer will have to determine the amount of the ____________________ and record it as a Loss/Bad Debt Expense during the period. 14. The ____________________ ____________________ option allows loans, A/R, and N/R to be reported at ____________________ ____________________ instead of NRV or carrying value. This decision has to be made at ____________________ or at the onset of a significant business event. Subsequent changes in fair value are recorded through the ____________________ ____________________, which is denoted FV-NI.