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

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter16: Accounting For Accounts Receivable

Section: Chapter Questions

Problem 1MC: The dollar difference between Accounts Receivable and Allowance for Doubtful Accounts is called (a)...

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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.
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 statements is TRUE? a.When the stated rate of interest exceeds the effective rate, the present value of the note receivable will be less than its face value. b.When the stated rate of interest differs from the effective rate, the note receivable will be sold at its face value. c.When the stated rate of interest exceeds the effective rate, the present value of the note receivable will be more than its face value. d.Companies record and report short-term notes receivable on a discounted basis.
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 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.
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 difference between the maturity value of a note and the net proceeds is called discounting.
When the interest is NOT included in the face value of the note, the maturity value is greater than the face value a. True Ob. False
Which of the following statements about noninterest-bearing notes is false? Select the correct response: The principal amount of a noninterest-bearing note is its future cash flows discounted at its effective interest rate The face amount of a noninterest-bearing note may include both the principal and interest as a single amount to be paid back at maturity date Noninterest bearing is not a descriptive designation for this type of note because such notes do bear interest The effective rate on a short-term noninterest-bearing note, with a specified term, cannot be determined unless it is given on the face of the note
11.When a note receivable is discounted with recourse, a. Liability on Discounted Notes Receivable is credited e b. Liability on Discounted Notes Receivable is credited equal to the proceeds. c. Notes Receivable is credited equal to the face value. d. Notes Receivable is credited equal to the maturity value.
When the effective-interest method is used to amortize notes premium or discount, the periodic amortization will A. increase if the notes were issued at a discount.B. decrease if the notes were issued at a premium. C. increase if the notes were issued at either a discount or a premium.D. increase if the notes were issued at a premium.