Question 1

When the term of a note is specified in days, time is computed using the exact number of days from the date of the note to the date of its maturity.

Accepted Answer

A) True 
 B)False

Question 2

The stated rate of interest is always the same as the effective rate of interest.

Accepted Answer

A) True 
 B)False

Question 3

Federal Bank of America has loaned $9,000 to Southgate Animal Hospital, using a 90-day non-interest-bearing note. The bank discounted the note at 8%. The debit to Discount on Notes Payable in the general journal will be in the amount of

Accepted Answer

A)  $9,000.00. 
B)  $8,820.00. 
C)  $180.00 
D)  $9,180.00. 
A)  $9,000.00. 
B)  $8,820.00. 
C)  $180.00 
D)  $9,180.00.

Question 4

The adjusting entry for accrued interest on a notes receivable includes

Accepted Answer

A)  debiting Interest Expense and crediting Interest Revenue. 
B)  debiting Accrued Interest Receivable and crediting Interest Revenue. 
C)  debiting Interest Revenue and crediting Accrued Interest Payable. 
D)  debiting Accrued Interest Receivable and crediting Interest Payable. 
A)  debiting Interest Expense and crediting Interest Revenue. 
B)  debiting Accrued Interest Receivable and crediting Interest Revenue. 
C)  debiting Interest Revenue and crediting Accrued Interest Payable. 
D)  debiting Accrued Interest Receivable and crediting Interest Payable.

Question 5

A three-month note dated April 1 would be due on July 1.

Accepted Answer

A) True 
 B)False

Question 6

The time of the note consists of the days or months from the date of issue to the date of the note's maturity.

Accepted Answer

A) True 
 B)False

Question 7

In calculating interest on a note, it is necessary to take which of the following factors into consideration?

Accepted Answer

A)  the principal 
B)  the maker 
C)  the payee 
D)  the bank 
A)  the principal 
B)  the maker 
C)  the payee 
D)  the bank

Question 8

The account, Discount on Notes Payable, is a

Accepted Answer

A)  contra-asset. 
B)  deferred charge. 
C)  contra-liability. 
D)  liability. 
A)  contra-asset. 
B)  deferred charge. 
C)  contra-liability. 
D)  liability.

Question 9

Prepare the general journal entries for Infinity Diner for the following notes receivable transactions (assuming there are 28 days in February).   ​

Accepted Answer

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

Question 10

Match the terms with the definitions.
-A written promise to pay a specific sum at a definite future date.

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

Face value of a note plus interest is called the

Accepted Answer

A)  discount. 
B)  proceeds. 
C)  principal. 
D)  maturity value. 
A)  discount. 
B)  proceeds. 
C)  principal. 
D)  maturity value.

Question 12

The account, Discount on Notes Payable, is a contra-liability account.

Accepted Answer

A) True 
 B)False

Question 13

Under accrual accounting, revenue is recognized when it is earned; therefore, accrued interest must be recorded at the end of the period.

Accepted Answer

A) True 
 B)False

Question 14

The one who is to receive the specified amount of money from a note is called the

Accepted Answer

A)  maker of the note. 
B)  payee of the note. 
C)  discounter of the note. 
D)  endorser of the note. 
A)  maker of the note. 
B)  payee of the note. 
C)  discounter of the note. 
D)  endorser of the note.

Question 15

The maker of the note is the one who promises to pay a certain amount of money at a definite future time.

Accepted Answer

A) True 
 B)False

Question 16

A 90-day note dated July 9 would be due on October 9.

Accepted Answer

A) True 
 B)False

Question 17

A promissory note must be signed by the maker of the note.

Accepted Answer

A) True 
 B)False

Exam 17: Accounting for Notes and Interest

When the term of a note is specified in days, time is computed using the exact number of days from the date of the note to the date of its maturity.

The stated rate of interest is always the same as the effective rate of interest.

Federal Bank of America has loaned $9,000 to Southgate Animal Hospital, using a 90-day non-interest-bearing note. The bank discounted the note at 8%. The debit to Discount on Notes Payable in the general journal will be in the amount of

The adjusting entry for accrued interest on a notes receivable includes

A three-month note dated April 1 would be due on July 1.

The time of the note consists of the days or months from the date of issue to the date of the note's maturity.

In calculating interest on a note, it is necessary to take which of the following factors into consideration?

The account, Discount on Notes Payable, is a

Prepare the general journal entries for Infinity Diner for the following notes receivable transactions (assuming there are 28 days in February). ​

Match the terms with the definitions. -A written promise to pay a specific sum at a definite future date.

Face value of a note plus interest is called the

The account, Discount on Notes Payable, is a contra-liability account.

Under accrual accounting, revenue is recognized when it is earned; therefore, accrued interest must be recorded at the end of the period.

The one who is to receive the specified amount of money from a note is called the

The maker of the note is the one who promises to pay a certain amount of money at a definite future time.

A 90-day note dated July 9 would be due on October 9.

A promissory note must be signed by the maker of the note.

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 Infinity Diner for the following notes receivable transactions (assuming there are 28 days in February).