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.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 3TF: The difference between the maturity value of a note and the net proceeds is called discounting.

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Question

26.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 amount.

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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.
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The difference between the maturity value of a note and the net proceeds is called discounting.
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