Question 1

Even if an interest-bearing note receivable is dishonored,interest income due on the note should be recorded.

Accepted Answer

A) True 
 B)False  True

Question 2

Compute the amount of interest owed on a 4-month,6 percent note for $7,000.

Accepted Answer

$140

Question 3

Since notes receivable are negotiable,internal control procedures must be devised to protect them against fraud and theft.

Accepted Answer

A) True 
 B)False  True

Question 4

When a note payable is ___________________,the lender deducts interest on the loan in advance and the borrower receives only the difference between the face amount of the note and the interest on it to maturity.

Accepted Answer

The answer of When a note payable is ___________________,the lender...

Question 5

Interest Expense is usually classified as a(n)____________________ expense on the income statement.

Accepted Answer

The answer of Interest Expense is usually classified as a(n)____________________...

Question 6

A ____________________ draft is a commercial draft that is payable during a specified period of time.

Accepted Answer

The answer of A ____________________ draft is a commercial draft...

Question 7

An ordinary check is one form of draft.

Accepted Answer

A) True 
 B)False

Question 8

Compute the amount of interest owed on a 6-month,9 percent note for $6,000.

Accepted Answer

The answer of Compute the amount of interest owed on...

Question 9

A firm purchased equipment for $12,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt.To record this transaction,the accountant would debit

Accepted Answer

A)  Equipment for $12,000 and credit Accounts Payable for $12,000. 
B)  Equipment for $12,000 and credit Notes Payable for $12,000. 
C)  Equipment for $12,360,credit Interest Expense for $360,and credit Notes Payable for $12,000. 
D)  Equipment for $12,000,debit Interest Expense for $360,and credit Notes Payable for $12,360. 
A)  Equipment for $12,000 and credit Accounts Payable for $12,000. 
B)  Equipment for $12,000 and credit Notes Payable for $12,000. 
C)  Equipment for $12,360,credit Interest Expense for $360,and credit Notes Payable for $12,000. 
D)  Equipment for $12,000,debit Interest Expense for $360,and credit Notes Payable for $12,360.

Question 10

How much interest will accrue on a $20,000 face value,120-day note that bears interest at 9 percent a year?

Accepted Answer

A)  $600 
B)  $900 
C)  $1,800 
D)  $3,600 
A)  $600 
B)  $900 
C)  $1,800 
D)  $3,600

Question 11

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is

Accepted Answer

A)  $4,400. 
B)  $4,100. 
C)  $4,000. 
D)  $3,900. 
A)  $4,400. 
B)  $4,100. 
C)  $4,000. 
D)  $3,900.

Question 12

On March 1,a firm purchased equipment for $5,000,signing a 30-day note bearing interest at 12 percent a year.The entry to record the payment of the amount due on March 31 will include a debit to Notes Payable for

Accepted Answer

A)  $5,050 and a credit to Cash for $5,050. 
B)  $5,000 and a credit to Cash for $5,000. 
C)  $5,000,a debit to Interest Expense for $50,and a credit to Cash for $5,050. 
D)  $5,000,a debit to Interest Expense for $600,and a credit to Cash for $5,600. 
A)  $5,050 and a credit to Cash for $5,050. 
B)  $5,000 and a credit to Cash for $5,000. 
C)  $5,000,a debit to Interest Expense for $50,and a credit to Cash for $5,050. 
D)  $5,000,a debit to Interest Expense for $600,and a credit to Cash for $5,600.

Question 13

Compute the maturity value of a 4-month,7 percent note with a face value of $4,000.(round answer to 2 decimal places)

Accepted Answer

The answer of Compute the maturity value of a 4-month,7...

Question 14

On January 1,a firm purchased equipment for $10,000,signing a 30-day note bearing interest at 12 percent a year.The entry to record the payment of the amount due on January 31 will include a debit to Notes Payable for

Accepted Answer

A)  $10,000 and a credit to Cash for $10,000. 
B)  $10,100 and a credit to Cash for $10,100. 
C)  $10,000,a debit to Interest Expense for $1,200,and a credit to Cash for $11,200. 
D)  $10,000,a debit to Interest Expense for $100,and a credit to Cash for $10,100. 
A)  $10,000 and a credit to Cash for $10,000. 
B)  $10,100 and a credit to Cash for $10,100. 
C)  $10,000,a debit to Interest Expense for $1,200,and a credit to Cash for $11,200. 
D)  $10,000,a debit to Interest Expense for $100,and a credit to Cash for $10,100.

Question 15

The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is

Accepted Answer

A)  $7,800. 
B)  $8,000. 
C)  $8,200. 
D)  $8,800. 
A)  $7,800. 
B)  $8,000. 
C)  $8,200. 
D)  $8,800.

Question 16

A _______________ is a business document that lists the goods accepted for transportation by a carrier.

Accepted Answer

The answer of A _______________ is a business document that...

Question 17

Interest Expense usually appears on the income statement as a nonoperating expense.

Accepted Answer

A) True 
 B)False

Question 18

When a note receivable is discounted,the net proceeds are computed by subtracting the discount charges from the ____________________ value of the note.

Accepted Answer

The answer of When a note receivable is discounted,the net...

Question 19

If the amount due on a note receivable is not collected at maturity,

Accepted Answer

A)  Allowance for Doubtful Accounts should immediately be debited. 
B)  the note is said to be dishonored. 
C)  the face value of the note should continue to be carried in the Notes Receivable account until all possible means of collecting the note have been exhausted. 
D)  Uncollectible Accounts Expense should be debited. 
A)  Allowance for Doubtful Accounts should immediately be debited. 
B)  the note is said to be dishonored. 
C)  the face value of the note should continue to be carried in the Notes Receivable account until all possible means of collecting the note have been exhausted. 
D)  Uncollectible Accounts Expense should be debited.

Question 20

The Jiminez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise.When the note is collected,the interest earned should be credited to

Accepted Answer

A)  Interest Income. 
B)  Sales. 
C)  Allowance for Doubtful Accounts. 
D)  Notes Receivable. 
A)  Interest Income. 
B)  Sales. 
C)  Allowance for Doubtful Accounts. 
D)  Notes Receivable.

Exam 16: Notes Payable and Notes Receivable

Even if an interest-bearing note receivable is dishonored,interest income due on the note should be recorded.

Compute the amount of interest owed on a 4-month,6 percent note for $7,000.

Since notes receivable are negotiable,internal control procedures must be devised to protect them against fraud and theft.

When a note payable is ___________________,the lender deducts interest on the loan in advance and the borrower receives only the difference between the face amount of the note and the interest on it to maturity.

Interest Expense is usually classified as a(n)____________________ expense on the income statement.

A ____________________ draft is a commercial draft that is payable during a specified period of time.

An ordinary check is one form of draft.

Compute the amount of interest owed on a 6-month,9 percent note for $6,000.

A firm purchased equipment for $12,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt.To record this transaction,the accountant would debit

How much interest will accrue on a $20,000 face value,120-day note that bears interest at 9 percent a year?

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is

On March 1,a firm purchased equipment for $5,000,signing a 30-day note bearing interest at 12 percent a year.The entry to record the payment of the amount due on March 31 will include a debit to Notes Payable for

Compute the maturity value of a 4-month,7 percent note with a face value of $4,000.(round answer to 2 decimal places)

On January 1,a firm purchased equipment for $10,000,signing a 30-day note bearing interest at 12 percent a year.The entry to record the payment of the amount due on January 31 will include a debit to Notes Payable for

The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is

A _______________ is a business document that lists the goods accepted for transportation by a carrier.

Interest Expense usually appears on the income statement as a nonoperating expense.

When a note receivable is discounted,the net proceeds are computed by subtracting the discount charges from the ____________________ value of the note.

If the amount due on a note receivable is not collected at maturity,

The Jiminez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise.When the note is collected,the interest earned should be credited to

Accounting: the Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and the Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analyses

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

Filters