True/False
Indicate whether the sentence or statement is true
or false.
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1.
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Notes
payable are the primary medium of exchange for business transactions.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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2.
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The
person to whom the amount of a note is payable is ____. a. | the account
receivable. | c. | the payee of the
note. | b. | the customer. | d. | none of the above. | | | | |
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3.
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The
number assigned to identify a specific note is ____. a. | the number of a
note | c. | the date of a
note | b. | the time of a
note | d. | none of the
above | | | | |
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4.
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An
amount paid for use of money for a period of time is ____. a. | principal of a
note | c. | interest
rate | b. | interest | d. | none of the
above | | | | |
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5.
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The
interest on a 12 percent note for $1,000.00 for 60 days is ____. a. | $20.00 | c. | $60.00 | b. | $30.00 | d. | $80.00 | | | | |
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6.
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When
a note payable is issued for cash, ____. a. | Notes Payable is debited | c. | Interest Expense is debited | b. | Cash is
credited | d. | none of the
above | | | | |
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7.
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The
journal entry to pay principal and interest on a note payable is ____. a. | debit Notes
Payable; credit Cash and Interest Expense | b. | debit Notes Payable and Interest Expense; credit
Cash | c. | debit Cash;
credit Notes Payable and Interest Expense | d. | debit Cash and Notes Payable; credit Interest
Expense | | |
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8.
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The
time of a note issued for less than one year is typically stated in ____. a. | days | c. | fraction of a
year | b. | months | d. | none of the
above | | | | |
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9.
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Notes
Payable are classified as ____. a. | current assets | c. | expenses | b. | current
liabilities | d. | revenue | | | | |
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10.
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The
source document for recording cash received from signing a note payable is a ____. a. | receipt | c. | memorandum | b. | check | d. | copy of the note | | | | |
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11.
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Interest expense of a business is ____. a. | an additional
cost of merchandise | c. | a financial
expense | b. | a normal operations expense | d. | a contra revenue account | | | | |
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12.
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Interest income of a business is ____. a. | a normal
operating revenue | c. | an
investment | b. | an other revenue | d. | an account receivable | | | | |
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13.
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Notes
receivable are classified as ____. a. | other expense | c. | current liabilities | b. | current
assets | d. | other
revenue | | | | |
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14.
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Recording revenue and expenses in the accounting period in which revenue is earned and
expenses are incurred is an application of the accounting concept ____. a. | Adequate
Disclosure | b. | Matching Expenses with Revenue | c. | Objective
Evidence | d. | Realization of Revenue | | |
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15.
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Received a80-day, 0% note receivable for $600.00 on November. Assuming the fiscal year
ends December31, the amount of accrued interest income recorded December31 will be
____. |