Question 1

Purchased merchandise (periodic)issuing a note would have which effect on the categories?

Accepted Answer

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

Question 2

Jeff Company issues a promissory note to David Company to get extended time on an account payable.David records this transaction as follows:

Accepted Answer

A) debit Accounts Receivable; credit Notes Receivable. 
B) debit Notes Receivable; credit Accounts Receivable. 
C) debit Notes Payable; credit Accounts Payable. 
D) debit Accounts Payable; credit Notes Payable. 
A) debit Accounts Receivable; credit Notes Receivable. 
B) debit Notes Receivable; credit Accounts Receivable. 
C) debit Notes Payable; credit Accounts Payable. 
D) debit Accounts Payable; credit Notes Payable.

Question 3

The maturity date for a 60-day note dated February 10,2012,a leap year is:

Accepted Answer

A) February 10. 
B) April 10. 
C) April 11. 
D) April 9. 
A) February 10. 
B) April 10. 
C) April 11. 
D) April 9.

Question 4

If a company does not pay its note payable on the agreed upon date,the note:

Accepted Answer

A) is renewed automatically for the same period of time. 
B) is discounted at a higher rate of interest. 
C) is dishonored by the vendor. 
D) is automatically placed in collection with an outside agency. 
A) is renewed automatically for the same period of time. 
B) is discounted at a higher rate of interest. 
C) is dishonored by the vendor. 
D) is automatically placed in collection with an outside agency.

Question 5

Straight Company sold merchandise to Cross Company and received a promissory note from Cross.Straight should record the transaction as:

Accepted Answer

A) debit Notes Receivable and credit Sales for the principal amount of the note. 
B) debit Notes Receivable and credit Sales for the maturity value of the note. 
C) debit Accounts Receivable and credit Sales for the maturity amount of the note. 
D) debit Accounts Receivable and credit Sales for the principal amount of the note. 
A) debit Notes Receivable and credit Sales for the principal amount of the note. 
B) debit Notes Receivable and credit Sales for the maturity value of the note. 
C) debit Accounts Receivable and credit Sales for the maturity amount of the note. 
D) debit Accounts Receivable and credit Sales for the principal amount of the note.

Question 6

A promissory note:

Accepted Answer

A) is a written promise to pay. 
B) is an oral promise to pay. 
C) is due in 30 days. 
D) entitles the maker to a discount. 
A) is a written promise to pay. 
B) is an oral promise to pay. 
C) is due in 30 days. 
D) entitles the maker to a discount.

Question 7

A promissory note from the sales of merchandise would have which effect on the categories?

Accepted Answer

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

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).
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column } 4 \
\hline \text { Interest expense } & & & & \
\hline
\end{array}$

Accepted Answer

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

Question 9

In the basic formula for calculating interest on a promissory note,principal refers to:

Accepted Answer

A) the original amount-the discount. 
B) the amount of interest to be paid. 
C) the original amount loaned or borrowed. 
D) the maturity value. 
A) the original amount-the discount. 
B) the amount of interest to be paid. 
C) the original amount loaned or borrowed. 
D) the maturity value.

Question 10

A note that is not paid on the maturity date is considered dishonored.

Accepted Answer

A) True 
 B)False

Question 11

The proceeds of a discounted note are the face value less the bank discount.

Accepted Answer

A) True 
 B)False

Question 12

The maturity date for a 66-day note dated June 29 is:

Accepted Answer

A) September 1. 
B) September 2. 
C) September 3. 
D) August 31. 
A) September 1. 
B) September 2. 
C) September 3. 
D) August 31.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The person or company that borrows money and signs a promissory note payable is the:

Accepted Answer

A) drawee. 
B) drawer. 
C) payee. 
D) maker. 
A) drawee. 
B) drawer. 
C) payee. 
D) maker.

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).
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column } 4 \
\hline \text { Interest income } & & & & \
\hline
\end{array}$

Accepted Answer

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

Question 16

The discount period on a discounted note is:

Accepted Answer

A) the same as the original period of the note. 
B) the time between the original date and the discount date. 
C) the time between the discount date and the maturity date. 
D) the original note period minus 10 days. 
A) the same as the original period of the note. 
B) the time between the original date and the discount date. 
C) the time between the discount date and the maturity date. 
D) the original note period minus 10 days.

Question 17

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).
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 & \text { Column } 4 \
\hline \text { Interest } & & & & \
\text { receivable } & & & & \
\hline
\end{array}$

Accepted Answer

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

Question 18

The basic formula for calculating the interest on a note is:

Accepted Answer

A) Interest = Principal × Rate × Time. 
B) Interest = (Principal × Rate)- Time. 
C) Interest = (Principal × Time)+ Rate. 
D) Interest = Principal × Rate/ Time. 
A) Interest = Principal × Rate × Time. 
B) Interest = (Principal × Rate)- Time. 
C) Interest = (Principal × Time)+ Rate. 
D) Interest = Principal × Rate/ Time.

Question 19

Martin Company needs additional time to pay its accounts payable to Boster Company.Martin makes a written promise to pay Boster the amount on a certain date.Boster records this transaction as follows:

Accepted Answer

A) debit Notes Receivable; credit Accounts Receivable. 
B) debit Cash; credit Accounts Receivable. 
C) debit Accounts Receivable; credit Notes Receivable. 
D) debit Notes Receivable; credit Cash. 
A) debit Notes Receivable; credit Accounts Receivable. 
B) debit Cash; credit Accounts Receivable. 
C) debit Accounts Receivable; credit Notes Receivable. 
D) debit Notes Receivable; credit Cash.

Question 20

Describe (a)the function of a promissory note and (b)explain its various parts and features.

Accepted Answer

a) A promissory note is a written promis

Exam 14: Notes Receivable and Notes Payable

Purchased merchandise (periodic)issuing a note would have which effect on the categories?

Jeff Company issues a promissory note to David Company to get extended time on an account payable.David records this transaction as follows:

The maturity date for a 60-day note dated February 10,2012,a leap year is:

If a company does not pay its note payable on the agreed upon date,the note:

Straight Company sold merchandise to Cross Company and received a promissory note from Cross.Straight should record the transaction as:

A promissory note:

A promissory note from the sales of merchandise would have which effect on the categories?

In the basic formula for calculating interest on a promissory note,principal refers to:

A note that is not paid on the maturity date is considered dishonored.

The proceeds of a discounted note are the face value less the bank discount.

The maturity date for a 66-day note dated June 29 is:

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

The person or company that borrows money and signs a promissory note payable is the:

The discount period on a discounted note is:

The basic formula for calculating the interest on a note is:

Martin Company needs additional time to pay its accounts payable to Boster Company.Martin makes a written promise to pay Boster the amount on a certain date.Boster records this transaction as follows:

Describe (a)the function of a promissory note and (b)explain its various parts and features.

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

Filters