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Exam 17: Accounting for Notes and Interest

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Question 31

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An auxiliary record of notes receivable that provides detailed information about notes held by a business is known as a

A) notes receivable register.
B) notes receivable worksheet.
C) notes receivable report.
D) schedule of notes receivable.

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Question 32

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Match the terms with the definitions. -A potential liability that may become a real liability depending on future events.

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

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Question 33

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Match the terms with the definitions. -The interest amount paid divided by the proceeds received on a discounted note. This amount will differ from the stated rate on the face of the note.

Match the terms with the definitions. -The procedure, which banks often use, of deducting interest in advance when making a loan.

The amount of interest on a 10% note of $600 dated May 7 and due July 18 would be $12.00.

In computing interest, it is customary to consider 360 days as a year.

From the information given below, determine the due date for the following notes: Compute the amount of accrued interest on the following notes: Compute the number of days from the issue date to the maturity date for the following notes:

When a business endorses a note and transfers it to a bank, the process is called

Calculate interest using a 360-day year.

A $6,700, 8.5% note is dated April 10 and is due in 75 days. The maturity value of the note would be

For notes payable issued in one period and due in the following period, accrued interest payable must be recorded at the end of the period.

Match the terms with the definitions. -The person or business agreeing to make the payment on a note.

The information contained in the notes receivable register normally is obtained from the general ledger accounts.

Interest = Principal × Rate × Time.

The face amount of a note that is promised to be paid at maturity is called the

The correct entry to make when a note is paid at maturity depends on whether the note is interest bearing or non-interest bearing.

The proper entry to make when a note is paid at maturity depends on whether it is an interest-bearing or a non-interest-bearing note.

The total of the notes payable register should agree with the total of the notes receivable account in the general ledger.

A written promise to pay a specific sum of money at a definite future date is called a promissory note.

The interest due at maturity on a $489.52, 8% note, dated May 28 and due August 2 is