Chapter 8 Part 2 - Notes Receivable

What is the definition of Notes Receivable?

• A written promise to pay a specific amount of money on a future date to another party.

• A written promise to receive a specific amount of money on a past date from another party.

• A written promise to receive a specific amount of money on a future date from oneself.

• A written promise to receive a specific amount of money on a future date from another party.

How do you record the issuance of Notes Receivable?

• Debit Cash

  Credit NotesReceivable.

• Debit Notes Receivable Credit Cash or Accounts Receivable.

• Debit Cash

  Credit Accounts Receivable.

• Debit Accounts Receivable

  Credit Notes Receivable.

How is interest income recognized for Notes Receivable?

• Equity basis of accounting

• Deferred basis of accounting

• Accrual basis of accounting

• Cash basis of accounting

How do you calculate accrued interest for Notes Receivable?

• Accrued interest for Notes Receivable is calculated by dividing the principal amount by the interest rate and the time period.

• Accrued interest for Notes Receivable is calculated by multiplying the principal amount by the interest rate and the time period.

• Accrued interest for Notes Receivable is calculated by subtracting the principal amount from the interest rate and the time period.

• Accrued interest for Notes Receivable is calculated by adding the principal amount to the interest rate and the time period.

What account is used to accrue interest for Notes Receivable?

• Accrued Interest

• Interest Revenue

• Maturity Amount

• Interest Expense

What does it mean to Honor a notes receivable?

• To ignore the obligations stated in the note.
• To fulfill the obligations stated in the note by making the required payment on time.

• To tear up the note and not make any payments.
• To delay the payments on the note indefinitely.