Final answer:
A dishonored note receivable is indeed usually reclassified as an account receivable, which is true. This is a standard accounting practice to adjust the records when a formal promissory agreement is broken by the debtor and the collection of funds is still outstanding.
Step-by-step explanation:
When addressing whether a dishonored note receivable is usually reclassified as an account receivable, the answer is True. A note receivable is a formal promissory agreement that denotes a debtor's obligation to pay a specified sum to the creditor on a specified date. When the debtor fails to pay the note on the due date, the note is said to be dishonored. In accounting practice, a dishonored note often reverts to being an account receivable, which reflects a less formal claim that the company has on the debtor for the collection of funds.
Accounts receivable represent the money owed to a company by its customers from sales or services on credit. Reclassifying a dishonored note as an account receivable is a way to maintain the account balances correctly and to continue efforts to collect the outstanding amount.