Final answer:
Notes receivable are amounts that customers owe. They are written promises to pay the amount of the note and interest. Accounts receivable are also amounts customers owe, but they are less formal than notes. Accounts receivable normally result from providing services or selling merchandise on account. Notes receivable and accounts receivable are current assets because they are usually converted to cash within one year or less.
Step-by-step explanation:
Notes receivable are amounts that customers owe and are written promises to pay the amount of the note plus interest.
These are formal agreements and represent a current asset for a company because they are expected to be converted to cash within one year.
Accounts receivable, on the other hand, are also amounts owed by customers, resulting typically from services provided or goods sold on credit, but they are less formal than notes receivable. Like notes, accounts receivable are current assets for the same reason.
A bank's balance sheet operates with assets and liabilities. Assets are valuable items a bank owns, like cash in its vaults or loans it has made, which can be used to produce income.
Liabilities, meanwhile, are what the bank owes others, such as customer deposits. The net worth of the bank is calculated by subtracting total liabilities from total assets, also known as bank capital.
The T-account is a tool used in accounting to represent this, with assets on the left and liabilities (plus net worth) on the right, ensuring that assets always equal liabilities plus net worth.