Question 1

The Jimenez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise. When the note is collected, the interest earned should be credited to

Accepted Answer

A)  Allowance for Doubtful Accounts.
B)  Interest Income.
C)  Sales.
D)  Notes Receivable.

Question 2

Sight drafts may be used to collect past-due accounts receivable or to obtain cash on delivery when shipments are made to new customers or customers with poor credit.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is not correct?

Accepted Answer

A)  The entry to record the issuance of a promissory note includes a credit to Interest Payable for the amount of interest that will accrue on the note until it is paid at maturity.
B)  The Notes Payable account is always debited or credited for the face value of a note.
C)  The entry to record the issuance of a promissory note includes a credit to the Notes Payable account.
D)  The entry to credit the payment of a note payable includes a debit to the Notes Payable account.

Question 4

A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent as evidence of the debt. The journal entry to record the issuance of the note is:

Accepted Answer

A)  debit Equipment for $6,000, debit Interest Expense for $180 and credit Notes Payable for$6,180.
B)  debit Equipment for $6,180, credit Interest Expense for $180, and credit Notes Payable for$6,000.
C)  debit Equipment for $6,000, and credit Notes Payable for $6,000.
D)  debit Equipment for $6,540, and credit Accounts Payable for $6,540.

Question 5

A 2-month note dated January 1, 2019, will mature on the same date as a 60-day note dated January 1, 2019.

Accepted Answer

A) True 
 B)False

Question 6

Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

Accepted Answer

The answer of Compute the maturity value of a 30-day,...

Question 7

Match between columns
                        Premises:  A draft on the issuing bank's own funds
 A financial document containing a promise or order to pay that meets all requirements of the Uniform Commercial Code in order to be transferable to another party
 A check written by a bank that orders another bank to pay the stated amount to a specific party
 A written order that requires one party (a person or business) to pay a stated sum of money t another party
 A commercial draft that is payable on presentation
 A commercial draft that is payable during a specified period of time
 A 360-day period used to calculate interest on a note
 A business document that lists goods accepted for transportation
 A note issued by one party that orders another party to pay a specified sum on a specified da
 An amount of money indicated to be paid, exclusive of interest or discounts
 The total amount (principal plus interest) that must be paid when a note comes due
 The amount shown on the face of a note
 Deducting the interest from the principal on a note payable or receivable in advance
 The fee charged for the use of money
 An asset representing a written promise by another party (the debtor) to pay the note holder (the creditor) a specified amount at a specified future date
 A liability representing a written promise by the maker of the note (the debtor) to pay anoth party (the creditor) a specified amount at a specified future date
 A form of commercial time draft used in transactions involving the sale of goods
 An item that can become a liability if certain things happen

Accepted Answer

The Answer of Bank draft and Banker's year and Bill is...

Question 8

Which of the following statements is not correct?

Accepted Answer

A)  When a note receivable is discounted, the proceeds are computed by subtracting the discount from the maturity value of the note.
B)  The entry to record the discounting of a note receivable may result in the recognition of interest expense.
C)  When a note is discounted at a bank, the proceeds are always less than the maturity value of the note.
D)  When a note receivable is discounted at a bank, the entry to record the transaction includes a debit to cash.

Question 9

The interest on a $20,000 face value, 90-day note that bears interest at 6 percent a year? (Assume 360 days in a year.)

Accepted Answer

A)  $12,000
B)  $3,000
C)  $1,200
D)  $300

Question 10

Compute the amount of interest owed on a 5-month, 7 percent note for $12,000.

Accepted Answer

The answer of Compute the amount of interest owed on...

Question 11

Notes Receivable Discounted represents a(n)---------liability.

Accepted Answer

The answer of Notes Receivable Discounted represents a(n)---------liability....

Question 12

A(n)----------is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

Accepted Answer

The answer of A(n)----------is a form of commercial time draft...

Question 13

The name given to the price charged for the use of money or credit is------- .

Accepted Answer

The answer of The name given to the price charged...

Question 14

If the proceeds of a note discounted at a bank are greater than the face value of the note, the difference is recognized as

Accepted Answer

A)  interest receivable.
B)  interest expense.
C)  notes receivable discounted.
D)  interest income.

Question 15

The face value of a noninterest-bearing note is the same as its maturity value.

Accepted Answer

A) True 
 B)False

Question 16

The Notes Receivable account normally has a credit balance.

Accepted Answer

A) True 
 B)False

Question 17

Compute the amount of interest owed on a 6-month, 12 percent note for $18,000.

Accepted Answer

The answer of Compute the amount of interest owed on...

Question 18

Annual Percentage Rate combines interest rates and fees at lending institutions enabling a borrower to compare fees.

Accepted Answer

A) True 
 B)False

Question 19

Compute the maturity value of a 120-day, 8 percent note with a face value of $3,000.

Accepted Answer

The answer of Compute the maturity value of a 120-day,...

Question 20

Upon collection of the amount due on a $15,000 face value, 60-day note with interest at 10 percent, the Note Receivable account is

Accepted Answer

A)  debited for $15,250.
B)  credited for $16,150.
C)  credited for $15,000.
D)  debited for $15,000.

Exam 16: Notes Payable and Notes Receivable

Notes Receivable Discounted represents a(n)---------liability.

Correct Answer
verified

Annual Percentage Rate combines interest rates and fees at lending institutions enabling a borrower to compare fees.

Correct Answer
verified

The name given to the price charged for the use of money or credit is------- .

Correct Answer
verified

If the proceeds of a note discounted at a bank are greater than the face value of the note, the difference is recognized as

Correct Answer
verified

Compute the maturity value of a 120-day, 8 percent note with a face value of $3,000.

Correct Answer
verified

A(n)----------is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

Correct Answer
verified

Compute the amount of interest owed on a 5-month, 7 percent note for $12,000.

Correct Answer
verified

The interest on a $20,000 face value, 90-day note that bears interest at 6 percent a year? (Assume 360 days in a year.)

Correct Answer
verified

Upon collection of the amount due on a $15,000 face value, 60-day note with interest at 10 percent, the Note Receivable account is

Correct Answer
verified

A 2-month note dated January 1, 2019, will mature on the same date as a 60-day note dated January 1, 2019.

Correct Answer
verified

Compute the amount of interest owed on a 6-month, 12 percent note for $18,000.

Correct Answer
verified

The Jimenez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise. When the note is collected, the interest earned should be credited to

Correct Answer
verified

Match the description with the accounting terms.

Which of the following statements is not correct?

Correct Answer
verified

Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

Correct Answer
verified

Sight drafts may be used to collect past-due accounts receivable or to obtain cash on delivery when shipments are made to new customers or customers with poor credit.

Correct Answer
verified

The face value of a noninterest-bearing note is the same as its maturity value.

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

The Notes Receivable account normally has a credit balance.

Correct Answer
verified

A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent as evidence of the debt. The journal entry to record the issuance of the note is:

Correct Answer
verified

Exam 16: Notes Payable and Notes Receivable

Notes Receivable Discounted represents a(n)---------liability.

Correct AnswerverifiedShow Answer

Annual Percentage Rate combines interest rates and fees at lending institutions enabling a borrower to compare fees.

Correct AnswerverifiedShow Answer

The name given to the price charged for the use of money or credit is------- .

Correct AnswerverifiedShow Answer

If the proceeds of a note discounted at a bank are greater than the face value of the note, the difference is recognized as

Correct AnswerverifiedShow Answer

Compute the maturity value of a 120-day, 8 percent note with a face value of $3,000.

Correct AnswerverifiedShow Answer

A(n)----------is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

Correct AnswerverifiedShow Answer

Compute the amount of interest owed on a 5-month, 7 percent note for $12,000.

Correct AnswerverifiedShow Answer

The interest on a $20,000 face value, 90-day note that bears interest at 6 percent a year? (Assume 360 days in a year.)

Correct AnswerverifiedShow Answer

Upon collection of the amount due on a $15,000 face value, 60-day note with interest at 10 percent, the Note Receivable account is

Correct AnswerverifiedShow Answer

A 2-month note dated January 1, 2019, will mature on the same date as a 60-day note dated January 1, 2019.

Correct AnswerverifiedShow Answer

Compute the amount of interest owed on a 6-month, 12 percent note for $18,000.

Correct AnswerverifiedShow Answer

The Jimenez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise. When the note is collected, the interest earned should be credited to

Correct AnswerverifiedShow Answer

Match the description with the accounting terms.

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

Correct AnswerverifiedShow Answer

Sight drafts may be used to collect past-due accounts receivable or to obtain cash on delivery when shipments are made to new customers or customers with poor credit.

Correct AnswerverifiedShow Answer

The face value of a noninterest-bearing note is the same as its maturity value.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The Notes Receivable account normally has a credit balance.

Correct AnswerverifiedShow Answer

A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent as evidence of the debt. The journal entry to record the issuance of the note is:

Correct AnswerverifiedShow Answer

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