The proceeds of a discounted note are equal to the face value of the note. True False
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A: option b is the answer.
The proceeds of a discounted note are equal to the face value of the note.
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- When a borrower receives the face amount of a discounted note less the discount, the amount received is known as a.the note deferred interest b.the note principal c.the note proceeds d.the note discountThe interest on a non-interest bearing note is equal to a. The excess of the face value over the present value. b. The excess of the present value over the face value. c. The excess of the present value over the market value of the note. d. Zero.How much is the premium or discount of the new note payable
- Which of the following statements is correct? If the note is issued at a discount, the interest income to be recognized every period is a. Either higher or lower than the amount of cash received for interest depending on the amount of the discount b. Equal to the amount of cash received for interest c. Lower than the amount of cash received for interest d.What is the principal amount of a note receivable plus the interest due called? promissory value maturity value expected value face valuePrincipal plus interest equals ______ of a note. (a) discount (b) net proceeds (c) interest rate (d) maturity value
- What is a key difference between a short-term note payable and a current portion of a noncurrent note payable?Under the effective interest method of interest bearing note in lump-sum payment, the interest to be paid is equal to A. the effective (yield) rate of interest multiplied by the face of the note. B. the effective rate multiplied by the beginning of the period carrying amount of the note. C. the stated rate multiplied by the beginning of the period carrying amount of the note. D. the stated (nominal) rate of interest multiplied by the face of the note.Which of the following is not true about the discount on short-term notes payable? a. The Discount on Notes Payable account should be reported as an asset on the balance sheet. b. When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate. c.The Discount on Notes Payable account has a debit balance. d. Discount on Notes Payable is a contra account to Notes Payable.
- When the market interest rate on a short-term note receivable is greater than the stated rate, ________. Group of answer choices the present value of the note is greater than its stated value the stated value of the note is greater than its face value the stated value of the note is less than its face value the present value of the note is less than its face valueA discounted note will produce an effective rate which is different than the stated rate. Why does this occur?Which of the following is true? Short-term notes payable should be discounted at its present value, more so, if it constitutes a financing transaction and the imputed interest can be measured without undue cost or effort. Transaction costs of issuing financial liabilities are expensed outright. The present value of a serial note's principal is computed by using the PV of 1 as the present value factor. Notes payable are obligations supported by creditor's promissory notes.
