Which of the following statements is true relating to amortization of discount on notes receivable? a. Amortization of discount increases the note's stated interest and carrying amount. b. Amortization of discount decreases the note's stated interest and carrying amount. c. Amortization of discount increases the note's stated interest and decreases the note's carrying amount. d. Amortization of discount decreases the note's stated interest and increases the note's carrying am

Which of the following statements is true relating to amortization of discount on notes receivable? a. Amortization of discount increases the note's stated interest and carrying amount. b. Amortization of discount decreases the note's stated interest and carrying amount. c. Amortization of discount increases the note's stated interest and decreases the note's carrying amount. d. Amortization of discount decreases the note's stated interest and increases the note's carrying am

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 19MC: Which of the following is true of a maturity date? A. It must be calculated in days, not in months...

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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.
19.Which of the following statements is incorrect? a. Trade receivables are recognized simultaneously with the recognition of related revenue when the criteria for revenue recognition are met. b. Under the gross price method, sales discounts are reported as a deduction from sales revenue. c. When accounts receivable are pledged against borrowing, the amount of accounts receivable pledged shall be included in the total receivables with disclosures. d. When discounting notes, the term discount period refers to the period of time that the note has been held by the endorser or payee; i.e. the period from the date of the note up to the date of discounting.
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 discount
The 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.
Which of the following is false about the discount on short-term notes payable? The Discount on Notes Payable account has a debit balance. The Discount on Notes Payable account should be reported as an asset on the balance sheet. If there is a discount on notes payable, the effective interest rate is higher than the stated discount rate. All of these are true
If the proceeds of a discounted note are less than the face amount, the difference is debited to Interest Expense. True or False
Which of the following statement is true about a noninterest-bearing note? Group of answer choices The amount of interest earned is based on the nominal interest when note was received. Interest stated on the face of the note is also the effective interest. The amount of interest earned is based on the effective interest when note was received. The amortization of discount is the amount of interest received during the period.
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 value
4. Which of the following statements about promissory notes is incorrect? a. Interest is the revenue to the maker of the note b. The party making the promise to pay is the debtor c. The party to whom payment is to be made is the creditor d. The maturity date of the note is the date when final payment of the note is due
The proceeds of a discounted note are equal to the face value of the note. True False
True or false When a non-interest-bearing note has been issued at a discount or premium and is fully amortized, on maturity date, the note is not equal to its face value.
Statement 1: If the nominal rate of the notes is greater than the effective rate of interest, the fair value of the notes is also greater than its face value.Statement 2: In amortizing the discount of non-interest bearing notes, the amount of discount amortized for the period is also the value of interest expense to be recognized for the period. a.True, True b.False, False c.False, True Td.rue, False