The correct answer is:
a. Notes receivable generally specify an interest rate and a maturity date at which any interest and principal must be repaid.
To understand the distinguishing characteristic between accounts receivable and notes receivable, we need to define these terms:
Accounts receivable refers to the money owed to a company by its customers for goods or services sold on credit. It represents the company's right to receive payment from its customers.
Notes receivable, on the other hand, are written agreements or promissory notes where a customer acknowledges their debt to a company. These notes include specific terms such as an interest rate and a maturity date, which indicate when the principal and any accrued interest must be repaid.
With this understanding, we can see that option a is the correct answer. Notes receivable have specific terms, such as interest rates and maturity dates, while accounts receivable do not have these explicit terms.