FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- 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 notearrow_forwardWhat is the expected result of a zero-interest-bearing note that is sold today for less than face value? a.) It has implicit interest equal to the difference between the face value and the present value. b.) It has an implicit premium paid equal to the difference between the face value and the present value. c.) It has a negative interest rate and will not generate revenue. d.) It has an implicit discount equal to the amortization of the sum of the face value and present value.arrow_forwardThe proceeds of a discounted note are equal to the face value of the note. True Falsearrow_forward
- 9. Face value of a note payable plus interest is called Omaturity value. O face value. Oproceeds. Oprincipal.arrow_forward2 of Banks tend to never deduct interest at any other time than at the END of the loan. Select one: True Falsearrow_forwardAnalyze the truth of this statement: Unlike bonds each installment note payment includes payment of a portion of the amount initially borrowed and payment of the interest on the outstanding balance. Group of answer choices This statement is true. This statement is false. There is not enough information to determine the truth of this statement. This statement does not apply to installment notes.arrow_forward
- Access the FASB Accounting Standards Codification at the FASB website ( www.fasb.org ). Determine the specific citation for accounting for each of the following items: 1. Disclosure requirements for maturities of long-term debt. 2. How to estimate the value of a note when a note having no ready market and no interest rate is exchanged for a noncash asset without a readily available fair value. 3. When the straight-line method can be used as an alternative to the interest method of determining interest.arrow_forward17. Which of the following statements is true? Select one: a. Simple interest relates to future value whereas compound interest relates to present value b. Simple interest pays interest only on a fixed principal amount whereas compound interest also pays interest on interest c. Simple interest relates to present value whereas compound interest relates to future value d. Simple interest applies when an investor receives payments and compound interest applies when an investor makes paymentsarrow_forwardfunds in a must remain on deposit for a stated time period in order to avoid an interest penalty?arrow_forward
- 32. This clause, typically found in a loan agreement, permits the holder to declare the entire amount of the loan due, in the event of a default by the borrower: -default clause -acceleration clause -HDC clause -none of the abovearrow_forwardTrue or false 1. The trend of the balance of the discount on note payable during the term of the non-interest bearing note is decreasing. 2. The note payable account will be credited at its present value upon acquisition of a property if the note issued was non-interest bearing. 3. The carrying amount of the note payable is the same all through out the term of an interest bearing note .arrow_forwardWhen the market interest rate on a short-term note receivable is greater than the stated rate, ________. Group of answer choices the present value of the note is greater than its stated value the stated value of the note is greater than its face value the stated value of the note is less than its face value the present value of the note is less than its face valuearrow_forward
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