Question 1

Interest expense is on a merchandise company's income statement under the heading:

Accepted Answer

A) Daily Expenses. 
B) Operating Expenses. 
C) Borrowing Expenses. 
D) Other Expenses or Interest Expense. 
A) Daily Expenses. 
B) Operating Expenses. 
C) Borrowing Expenses. 
D) Other Expenses or Interest Expense.

Question 2

The effective interest rate on a discounted note payable is less than the rate on the note.

Accepted Answer

A) True 
 B)False

Question 3

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 4

The maturity date for a 77-day note dated June 28 is:

Accepted Answer

A) September 15. 
B) September 14. 
C) September 13 
D) September 16. 
A) September 15. 
B) September 14. 
C) September 13 
D) September 16.

Question 5

The maturity value of a $5,000,10%,9-month note is:

Accepted Answer

A) $375. 
B) $5,000. 
C) $5,375. 
D) $4,625. 
A) $375. 
B) $5,000. 
C) $5,375. 
D) $4,625.

Question 6

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

Accepted Answer

A) debiting Interest Income. 
B) debiting Interest Expense. 
C) crediting Interest Expense. 
D) crediting Interest Income. 
A) debiting Interest Income. 
B) debiting Interest Expense. 
C) crediting Interest Expense. 
D) crediting Interest Income.

Question 7

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 is 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 is correct.

Question 8

Discount on Notes Payable is a contra-asset account that records interest deducted in advance.

Accepted Answer

A) True 
 B)False

Question 9

Jane borrowed $1,000 from West Bank and signed a promissory note.West Bank is:

Accepted Answer

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

Question 10

Receiving payment from a customer on an interest bearing note would entail a debit to Interest Income.

Accepted Answer

A) True 
 B)False

Question 11

Davis Law Firm is borrowing $15,000 at 10% interest for one year.The $15,000 is the:

Accepted Answer

A) principal. 
B) proceeds. 
C) amount of interest. 
D) net amount. 
A) principal. 
B) proceeds. 
C) amount of interest. 
D) net amount.

Question 12

The proceeds received from discounting a note could be less than the face value.

Accepted Answer

A) True 
 B)False

Question 13

If your customer does not pay the note at maturity,the journal entry on your books would be:

Accepted Answer

A) debit Notes Payable and credit Accounts Payable. 
B) debit Accounts Payable,credit Interest Income and credit Notes Payable. 
C) debit Accounts Receivable,credit Interest Income and credit Notes Receivable. 
D) debit Notes Receivable,credit Interest Income,and credit Accounts Receivable. 
A) debit Notes Payable and credit Accounts Payable. 
B) debit Accounts Payable,credit Interest Income and credit Notes Payable. 
C) debit Accounts Receivable,credit Interest Income and credit Notes Receivable. 
D) debit Notes Receivable,credit Interest Income,and credit Accounts Receivable.

Question 14

Brooke Company grants James Decorating additional time to pay its past due account.James makes a written promise to pay Brooke the amount on a certain date.Brooke Company 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 Accounts Payable;credit Notes Payable. 
A) debit Notes Receivable;credit Accounts Receivable. 
B) debit Cash;credit Accounts Receivable. 
C) debit Accounts Receivable;credit Notes Receivable. 
D) debit Accounts Payable;credit Notes Payable.

Question 15

On March 5,Weber Services discounts a customer's 9%,60-day,$10,000 note dated January 20.The discount rate charged by the bank is 12%.The discount period is:

Accepted Answer

A) 24 days. 
B) 16 days. 
C) 60 days. 
D) 0 days. 
A) 24 days. 
B) 16 days. 
C) 60 days. 
D) 0 days.

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

Prepare general journal entries for Huckabee Corporation for the following transactions:

Accepted Answer

The answer of Prepare general journal entries for Huckabee Corporation...

Question 18

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 19

Both Accounts Payable and Notes Payable are both formal promises to pay.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 14: Notes Receivable and Notes Payable

Interest expense is on a merchandise company's income statement under the heading:

The effective interest rate on a discounted note payable is less than the rate on the note.

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

The maturity date for a 77-day note dated June 28 is:

The maturity value of a $5,000,10%,9-month note is:

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

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

Discount on Notes Payable is a contra-asset account that records interest deducted in advance.

Jane borrowed $1,000 from West Bank and signed a promissory note.West Bank is:

Receiving payment from a customer on an interest bearing note would entail a debit to Interest Income.

Davis Law Firm is borrowing $15,000 at 10% interest for one year.The $15,000 is the:

The proceeds received from discounting a note could be less than the face value.

If your customer does not pay the note at maturity,the journal entry on your books would be:

Brooke Company grants James Decorating additional time to pay its past due account.James makes a written promise to pay Brooke the amount on a certain date.Brooke Company records this transaction as follows:

On March 5,Weber Services discounts a customer's 9%,60-day,$10,000 note dated January 20.The discount rate charged by the bank is 12%.The discount period is:

The discount period on a discounted note is:

Prepare general journal entries for Huckabee Corporation for the following transactions:

Both Accounts Payable and Notes Payable are both formal promises to pay.

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:

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:

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,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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