Question 1

Which of the following consists of the days or months from the date of issue of a note to the date of its maturity?

Accepted Answer

A)  rate of interest 
B)  principal of the note 
C)  time of the note 
D)  discount of the note 
A)  rate of interest 
B)  principal of the note 
C)  time of the note 
D)  discount of the note

Question 2

A note on which no rate of interest is specified is a(n)

Accepted Answer

A)  market-rate note. 
B)  interest-bearing note. 
C)  non-interest-bearing note. 
D)  variable note. 
A)  market-rate note. 
B)  interest-bearing note. 
C)  non-interest-bearing note. 
D)  variable note.

Question 3

The account that is credited for accrued interest on notes receivable is Interest Receivable.

Accepted Answer

A) True 
 B)False

Question 4

For the following notes, calculate the due date.

Accepted Answer

The answer of For the following notes, calculate the due...

Question 5

Match the terms with the definitions.
-The rate at which interest is charged, usually expressed as an annual percentage, but in some cases a monthly rate is quoted.

Accepted Answer

A) term of the note 
B) accrued interest on notes receivable 
C) bank discount (note payable) 
D) bank discount (note receivable) 
E) contingent liability
F)rate of interest
G)discounting (note payable)
H)payee
I)notes receivable register
J)non-interest-bearing note
K)interest-bearing note 
A) term of the note 
B) accrued interest on notes receivable 
C) bank discount (note payable) 
D) bank discount (note receivable) 
E) contingent liability
F)rate of interest
G)discounting (note payable)
H)payee
I)notes receivable register
J)non-interest-bearing note
K)interest-bearing note

Question 6

The principal of the note is the face amount that the maker promises to pay at maturity.

Accepted Answer

A) True 
 B)False

Question 7

When commercial banks deduct interest in advance on a note, the procedure is known as discounting.

Accepted Answer

A) True 
 B)False

Question 8

American Bank has loaned $12,000 to Shoreline Petroleum Inc. using a 60-day non-interest-bearing note. The bank discounted the note at 12%. The proceeds of the loan will be

Accepted Answer

A)  $12,000. 
B)  $11,760. 
C)  $240. 
D)  $12,240. 
A)  $12,000. 
B)  $11,760. 
C)  $240. 
D)  $12,240.

Question 9

If the maker of a note refuses or is unable to pay or renew it at maturity, the note is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 10

Match the terms with the definitions.
-A notification to the payee that the bank has collected interest on a note and added the amount to the payee's account.

Accepted Answer

A) accrued interest on notes payable 
B) time 
C) proceeds (note receivable) 
D) principal of the note 
E) notes payable register
F)credit advice
G)maturity value
H)discounting a note receivable
I)dishonored
J)effective rate
K)promissory note
L)maker 
A) accrued interest on notes payable 
B) time 
C) proceeds (note receivable) 
D) principal of the note 
E) notes payable register
F)credit advice
G)maturity value
H)discounting a note receivable
I)dishonored
J)effective rate
K)promissory note
L)maker

Question 11

On a non-interest bearing, discounted note, it is possible for the stated interest rate to differ from the effective interest rate.

Accepted Answer

A) True 
 B)False

Question 12

A $5,000, 12% note is dated April 10 and is due in 90 days. The due date would be

Accepted Answer

A)  June 9. 
B)  June 10. 
C)  July 9. 
D)  July 10. 
A)  June 9. 
B)  June 10. 
C)  July 9. 
D)  July 10.

Question 13

From the information given below, compute the time in days for the following notes:   From the information given below, calculate the accrued interest for the following notes (round to two decimal places, if necessary):

Accepted Answer

The answer of From the information given below, compute the...

Question 14

Match the terms with the definitions.
-A detailed auxiliary record of notes receivable.

Accepted Answer

A) term of the note 
B) accrued interest on notes receivable 
C) bank discount (note payable) 
D) bank discount (note receivable) 
E) contingent liability
F)rate of interest
G)discounting (note payable)
H)payee
I)notes receivable register
J)non-interest-bearing note
K)interest-bearing note 
A) term of the note 
B) accrued interest on notes receivable 
C) bank discount (note payable) 
D) bank discount (note receivable) 
E) contingent liability
F)rate of interest
G)discounting (note payable)
H)payee
I)notes receivable register
J)non-interest-bearing note
K)interest-bearing note

Question 15

Match the terms with the definitions.
-A note with an explicit interest rate stated on the face of the note.

Accepted Answer

A) term of the note 
B) accrued interest on notes receivable 
C) bank discount (note payable) 
D) bank discount (note receivable) 
E) contingent liability
F)rate of interest
G)discounting (note payable)
H)payee
I)notes receivable register
J)non-interest-bearing note
K)interest-bearing note 
A) term of the note 
B) accrued interest on notes receivable 
C) bank discount (note payable) 
D) bank discount (note receivable) 
E) contingent liability
F)rate of interest
G)discounting (note payable)
H)payee
I)notes receivable register
J)non-interest-bearing note
K)interest-bearing note

Question 16

Prepare the general journal entries for the following notes payable transactions for the Village Dock Café.   ​

Accepted Answer

The answer of Prepare the general journal entries for the...

Question 17

Match the terms with the definitions.
-Transferring a note receivable to the bank for cash.

Accepted Answer

A) accrued interest on notes payable 
B) time 
C) proceeds (note receivable) 
D) principal of the note 
E) notes payable register
F)credit advice
G)maturity value
H)discounting a note receivable
I)dishonored
J)effective rate
K)promissory note
L)maker 
A) accrued interest on notes payable 
B) time 
C) proceeds (note receivable) 
D) principal of the note 
E) notes payable register
F)credit advice
G)maturity value
H)discounting a note receivable
I)dishonored
J)effective rate
K)promissory note
L)maker

Question 18

A promissory note may be interest bearing or non-interest bearing.

Accepted Answer

A) True 
 B)False

Question 19

Match the terms with the definitions.
-Interest expense that has been incurred but not paid.

Accepted Answer

A) accrued interest on notes payable 
B) time 
C) proceeds (note receivable) 
D) principal of the note 
E) notes payable register
F)credit advice
G)maturity value
H)discounting a note receivable
I)dishonored
J)effective rate
K)promissory note
L)maker 
A) accrued interest on notes payable 
B) time 
C) proceeds (note receivable) 
D) principal of the note 
E) notes payable register
F)credit advice
G)maturity value
H)discounting a note receivable
I)dishonored
J)effective rate
K)promissory note
L)maker

Question 20

When a notes receivable is discounted, the business that endorses the note becomes potentially liable to the bank. This liability is called a

Accepted Answer

A)  potential liability. 
B)  dependent liability. 
C)  conditional liability. 
D)  contingent liability. 
A)  potential liability. 
B)  dependent liability. 
C)  conditional liability. 
D)  contingent liability.

Exam 17: Accounting for Notes and Interest

Which of the following consists of the days or months from the date of issue of a note to the date of its maturity?

A note on which no rate of interest is specified is a(n)

The account that is credited for accrued interest on notes receivable is Interest Receivable.

For the following notes, calculate the due date.

Match the terms with the definitions. -The rate at which interest is charged, usually expressed as an annual percentage, but in some cases a monthly rate is quoted.

The principal of the note is the face amount that the maker promises to pay at maturity.

When commercial banks deduct interest in advance on a note, the procedure is known as discounting.

American Bank has loaned $12,000 to Shoreline Petroleum Inc. using a 60-day non-interest-bearing note. The bank discounted the note at 12%. The proceeds of the loan will be

If the maker of a note refuses or is unable to pay or renew it at maturity, the note is said to be dishonored.

Match the terms with the definitions. -A notification to the payee that the bank has collected interest on a note and added the amount to the payee's account.

On a non-interest bearing, discounted note, it is possible for the stated interest rate to differ from the effective interest rate.

A $5,000, 12% note is dated April 10 and is due in 90 days. The due date would be

From the information given below, compute the time in days for the following notes: From the information given below, calculate the accrued interest for the following notes (round to two decimal places, if necessary):

Match the terms with the definitions. -A detailed auxiliary record of notes receivable.

Match the terms with the definitions. -A note with an explicit interest rate stated on the face of the note.

Prepare the general journal entries for the following notes payable transactions for the Village Dock Café. ​

Match the terms with the definitions. -Transferring a note receivable to the bank for cash.

A promissory note may be interest bearing or non-interest bearing.

Match the terms with the definitions. -Interest expense that has been incurred but not paid.

When a notes receivable is discounted, the business that endorses the note becomes potentially liable to the bank. This liability is called a

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

Filters

Prepare the general journal entries for the following notes payable transactions for the Village Dock Café.