Question 1

Match the terms with the definitions.
-The months or days from the date of issue to the date of maturity.

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 2

Match the terms with the definitions.
-A note which the maker does not pay or renew at maturity.

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 3

The net amount received from the bank on a discounted note receivable is called the proceeds.

Accepted Answer

A) True 
 B)False

Question 4

Match the terms with the definitions.
-The face amount of the note that the maker promises to pay at maturity. The base on which interest is calculated.

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 5

A promissory note is usually referred to as a "note."

Accepted Answer

A) True 
 B)False

Question 6

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

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 7

Match the terms with the definitions.
-The difference between the maturity value of the notes receivable and the bank discount. This is the amount of cash received by the business discounting the note.

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 8

In preparing the financial statements at the end of the year, the account Accrued Interest Payable is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 9

Match the terms with the definitions.
-The amount that the bank deducts from the face of a 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 10

If the maker of a note does not pay or renew a note at maturity, the note is said to be

Accepted Answer

A)  dishonored. 
B)  discounted. 
C)  discontinued. 
D)  dismantled. 
A)  dishonored. 
B)  discounted. 
C)  discontinued. 
D)  dismantled.

Question 11

Match the terms with the definitions.
-The specific person or business to whom a note is payable.

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 12

The journal entry for accrued interest on a note payable includes

Accepted Answer

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

Question 13

Match the terms with the definitions.
-Interest revenue that has been earned but not yet received.

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 14

In preparing the financial statements at the end of the year, the balance in the interest receivable account will be reported on the balance sheet as a current asset.

Accepted Answer

A) True 
 B)False

Question 15

When a company pays an interest-bearing note payable on the due date, the journal entry on the books of the company making the payment includes

Accepted Answer

A)  debiting Notes Payable and Interest Expense and crediting Cash. 
B)  debiting Cash and crediting Notes Payable and Interest Expense. 
C)  debiting Notes Payable and Cash and crediting Interest Revenue. 
D)  debiting Cash and Interest Expense and crediting Notes Payable. 
A)  debiting Notes Payable and Interest Expense and crediting Cash. 
B)  debiting Cash and crediting Notes Payable and Interest Expense. 
C)  debiting Notes Payable and Cash and crediting Interest Revenue. 
D)  debiting Cash and Interest Expense and crediting Notes Payable.

Question 16

To obtain an extension of time for the payment of an account, a customer may issue a note for all or part of the amount due.

Accepted Answer

A) True 
 B)False

Question 17

When a note is received from a customer to obtain an extension of time for payment on a past-due account, the journal entry would include

Accepted Answer

A)  debiting Accounts Receivable and crediting Notes Receivable. 
B)  debiting Accounts Payable and crediting Notes Payable. 
C)  debiting Notes Payable and crediting Accounts Payable. 
D)  debiting Notes Receivable and crediting Accounts Receivable. 
A)  debiting Accounts Receivable and crediting Notes Receivable. 
B)  debiting Accounts Payable and crediting Notes Payable. 
C)  debiting Notes Payable and crediting Accounts Payable. 
D)  debiting Notes Receivable and crediting Accounts Receivable.

Question 18

A debit balance in the discount on notes payable account will normally become a debit to Interest Expense.

Accepted Answer

A) True 
 B)False

Question 19

If the time of the note is stated in days, the due date is the specified number of days after the issue date.

Accepted Answer

A) True 
 B)False

Question 20

The person who promises to pay a certain amount of money at a definite future time 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.

Exam 17: Accounting for Notes and Interest

Match the terms with the definitions. -The months or days from the date of issue to the date of maturity.

Match the terms with the definitions. -A note which the maker does not pay or renew at maturity.

The net amount received from the bank on a discounted note receivable is called the proceeds.

Match the terms with the definitions. -The face amount of the note that the maker promises to pay at maturity. The base on which interest is calculated.

A promissory note is usually referred to as a "note."

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

Match the terms with the definitions. -The difference between the maturity value of the notes receivable and the bank discount. This is the amount of cash received by the business discounting the note.

In preparing the financial statements at the end of the year, the account Accrued Interest Payable is reported on the income statement.

Match the terms with the definitions. -The amount that the bank deducts from the face of a note.

If the maker of a note does not pay or renew a note at maturity, the note is said to be

Match the terms with the definitions. -The specific person or business to whom a note is payable.

The journal entry for accrued interest on a note payable includes

Match the terms with the definitions. -Interest revenue that has been earned but not yet received.

In preparing the financial statements at the end of the year, the balance in the interest receivable account will be reported on the balance sheet as a current asset.

When a company pays an interest-bearing note payable on the due date, the journal entry on the books of the company making the payment includes

To obtain an extension of time for the payment of an account, a customer may issue a note for all or part of the amount due.

When a note is received from a customer to obtain an extension of time for payment on a past-due account, the journal entry would include

A debit balance in the discount on notes payable account will normally become a debit to Interest Expense.

If the time of the note is stated in days, the due date is the specified number of days after the issue date.

The person who promises to pay a certain amount of money at a definite future time is called the

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

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