Self Assessment Quizzes

CHAPTER 26: Section 2 Notes Payable

	1.	The interest that is deducted in advance from a note is called the

		a.	interest value
		b.	proceeds
		c.	front interest
		d.	bank discount

	2.	The discount on a $2,500 ninety day note with a discount rate of 11% would be

		a.	$135.60
		b.	$67.80
		c.	$275
		d.	$55.25

	3.	The discount rate on a $3,000 ninety day note with a bank discount of $66.57 would be

		a.	9%
		b.	10%
		c.	11%
		d.	12%

	4.	A promissory note issued to a creditor is

		a.	a note receivable
		b.	a note payable
		c.	an account payable
		d.	an account receivable

	5.	A nonoperating expense is called

		a.	Interest Expense
		b.	Other Expense
		c.	Non-op Expense
		d.	Operationally Challenged Expense

	6.	The cash received from the borrower is called the

		a.	proceeds
		b.	loan
		c.	advance payment
		d.	fund allowance

	7.	A note that requires the face value plus interest to be paid on the maturity date is called

		a.	a value plus note
		b.	a noninterest-bearing note payable
		c.	an interest-bearing note payable
		d.	a cash value note payable

	8.	The proceeds from a noninterest-bearing $5,500 sixty day note with a discount rate of 12% would be

		a.	$5,500
		b.	$4,840
		c.	$5,444.28
		d.	$5,391.51

	9.	The accounts affected by recording a noninterest-bearing note are

		a.	Cash in Bank, Interest Expense, and Notes Receivable
		b.	Cash in Bank, Discount on Notes Receivable, and Notes Receivable
		c.	Cash in Bank, Discount on Notes Payable, and Notes Payable
		d.	Cash in Bank, Interest Expense, and Notes Payable