Chapter 6 Clip 3
- What Is an IOU?
- How an IOU work?
- Key Point of an IOU.
- An IOU is a written acknowledgement of debt that one party owes another.
- In business transactions, an IOU may be followed by a more formal written contract.
- The informality of the IOU can make it difficult to enforce, and usually impossible to sell or trade.
- The term IOU is also used in bookkeeping to refer to accounts receivable.
- IOUs are less formal and legally binding than promissory notes.