Question 1

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

Accepted Answer

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

Question 2

When an interest-bearing note comes due and is uncollectible,the journal entry includes:

Accepted Answer

A) debiting Notes Receivable; crediting Accounts Receivable. 
B) debiting Notes Receivable; crediting Accounts Receivable and Interest Revenue. 
C) debiting Accounts Receivable and crediting Interest Revenue. 
D) debiting Accounts Receivable and crediting Notes Receivable and Interest Revenue. 
A) debiting Notes Receivable; crediting Accounts Receivable. 
B) debiting Notes Receivable; crediting Accounts Receivable and Interest Revenue. 
C) debiting Accounts Receivable and crediting Interest Revenue. 
D) debiting Accounts Receivable and crediting Notes Receivable and Interest Revenue. D

Question 3

When a business endorses a note and transfers it to a financial institution,the process is called:

Accepted Answer

A) dishonoring a note receivable. 
B) collecting a note receivable. 
C) cosigning a note receivable. 
D) discounting a note receivable. 
A) dishonoring a note receivable. 
B) collecting a note receivable. 
C) cosigning a note receivable. 
D) discounting a note receivable. D

Question 4

The journal entry for accrued interest on a note payable includes:

Accepted Answer

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

Question 5

Paying the principal plus interest would have which effect on the categories?

Accepted Answer

A) Total liabilities would be increased. 
B) Total assets would be decreased. 
C) Owner's equity would be decreased. 
D) B and C could be correct. 
A) Total liabilities would be increased. 
B) Total assets would be decreased. 
C) Owner's equity would be decreased. 
D) B and C could be correct.

Question 6

An adjustment that must be made for the interest on a note payable that is incurred during the period but not paid or recorded because payment is not due is called:

Accepted Answer

A) Notes Payable. 
B) Accrued Interest Income. 
C) Accrued Interest Expense. 
D) Discount Payable Liability. 
A) Notes Payable. 
B) Accrued Interest Income. 
C) Accrued Interest Expense. 
D) Discount Payable Liability.

Question 7

When a company goes to a bank and exchanges a note for cash,the process is called discounting a note.

Accepted Answer

A) True 
 B)False

Question 8

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column } 4 \
\hline \text { Interest payable } & & & & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following, identify in...

Question 9

On February 15,Weber Services discounts a customer's 9%,90-day,$10,000 note dated January 10.The discount rate charged by the bank is 12%.The discount period is:

Accepted Answer

A) 54 days. 
B) 36 days. 
C) 90 days. 
D) 0 days. 
A) 54 days. 
B) 36 days. 
C) 90 days. 
D) 0 days.

Question 10

Prepare journal entries for the following transactions for Sysco Imports Company.
a)Purchased $4,000 of merchandise (periodic)from Clarke Industries Company on account.
b)Gave Clarke Industries Company a 60-day,9% note settlement of the account payable.
c)Sysco defaulted on its note on the maturity date.
d)Sysco paid the previously defaulted note plus $25 additional interest.

Accepted Answer

@#IMG-DLM&_TB5851_00

Question 11

Accrued interest resulting from a trade note receivable would have which effect on the categories?

Accepted Answer

A) Total liabilities would be increased. 
B) Total assets would be increased. 
C) Owner's equity would be decreased. 
D) None of these answers are correct. 
A) Total liabilities would be increased. 
B) Total assets would be increased. 
C) Owner's equity would be decreased. 
D) None of these answers are correct.

Question 12

The terms payee and maker are interchangeable.

Accepted Answer

A) True 
 B)False

Question 13

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column } 2 & \text { Column } 3 & \text { Column } 4 \
\hline \begin{array} { l } 
\text { Accounts } \
\text { receivable }
\end{array} & & & & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following, identify in...

Question 14

The formula for calculating interest on a note is: principal x rate x time.

Accepted Answer

A) True 
 B)False

Question 15

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column 2 } & \text { Column } 3 & \text { Column } 4 \
\hline \text { Notes receivable } & & & & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following, identify in...

Question 16

Accrued interest on a note payable would have which effect on the categories?

Accepted Answer

A) Total liabilities would be increased. 
B) Total assets would be increased. 
C) Owner's equity would be increased. 
D) None of these answers are correct. 
A) Total liabilities would be increased. 
B) Total assets would be increased. 
C) Owner's equity would be increased. 
D) None of these answers are correct.

Question 17

When paying off a note payable,last year's accrual was ignored and the total interest was recorded as an expense.This error would cause:

Accepted Answer

A) the period end assets to be understated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) the period's net income to be overstated. 
A) the period end assets to be understated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) the period's net income to be overstated.

Question 18

The discount period begins with the date of issue and ends with the date of the discount.

Accepted Answer

A) True 
 B)False

Question 19

The proper entry to make when a note is paid on the maturity date depends on whether the note is an interest-bearing or non-interest-bearing note.

Accepted Answer

A) True 
 B)False

Question 20

A 3-month note dated September 30 is due December 31.

Accepted Answer

A) True 
 B)False

Exam 14: Notes Receivable and Notes Payable

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

When an interest-bearing note comes due and is uncollectible,the journal entry includes:

When a business endorses a note and transfers it to a financial institution,the process is called:

The journal entry for accrued interest on a note payable includes:

Paying the principal plus interest would have which effect on the categories?

An adjustment that must be made for the interest on a note payable that is incurred during the period but not paid or recorded because payment is not due is called:

When a company goes to a bank and exchanges a note for cash,the process is called discounting a note.

On February 15,Weber Services discounts a customer's 9%,90-day,$10,000 note dated January 10.The discount rate charged by the bank is 12%.The discount period is:

Accrued interest resulting from a trade note receivable would have which effect on the categories?

The terms payee and maker are interchangeable.

The formula for calculating interest on a note is: principal x rate x time.

Accrued interest on a note payable would have which effect on the categories?

When paying off a note payable,last year's accrual was ignored and the total interest was recorded as an expense.This error would cause:

The discount period begins with the date of issue and ends with the date of the discount.

The proper entry to make when a note is paid on the maturity date depends on whether the note is an interest-bearing or non-interest-bearing note.

A 3-month note dated September 30 is due December 31.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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