ACCOUNTING EXAM 3 CH. 9 REVIEW

Losses have the effect of reducing net income, while gains increase net income.

• True

• False

As each monthly payment of an installment note payable is recorded, the amount of interest expense does not change.

• True

• False

A company issues a $200,000, 5%, six-year note on January 1, 2024. What amount will be recorded for interest expense for the first month’s payment on January 31, 2024?

• $1,000.00

• $833.33

• $138.89

• $694.44

Which of the following is the primary source of corporate equity financing?

• Stockholders

• Notes

• Bonds

• Leases

For a ten-year installment note, the portion of the periodic installment payment that represents interest in the third year is:

• More than in the fourth year.

• Less than in the fourth year.

• The same as in the fourth year.

• The same as in the first year.