Questions: A promissory note received from a customer in exchange for an account receivable is recorded by the payee as: Multiple Choice A cash equivalent. An account receivable. A note receivable. A short-term investment. A note payable.

The answer is: A note receivable.

Explanation for each option:

1. A cash equivalent: This is incorrect. A cash equivalent refers to short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. A promissory note does not fit this definition as it is a promise to pay in the future, not an immediate cash equivalent.

2. An account receivable: This is incorrect. An account receivable is an amount owed to a business by its customers for goods or services delivered on credit. When a promissory note is received, it replaces the account receivable with a formal written promise to pay, thus it is no longer classified as an account receivable.

3. A note receivable: This is correct. A note receivable is a written promise that a customer will pay a fixed amount of money by a certain date. When a promissory note is received in exchange for an account receivable, it is recorded as a note receivable by the payee.

4. A short-term investment: This is incorrect. A short-term investment refers to investments that are expected to be converted into cash within one year. While a note receivable can be short-term, it is specifically categorized as a note receivable rather than a general short-term investment.

5. A note payable: This is incorrect. A note payable is a liability representing a written promise to pay a certain amount of money at a future date. It is recorded by the maker of the note, not the payee. The payee records it as a note receivable, not a note payable.