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4. When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for the (Points : 5) face value of the note. face value of the note
plus the interest that will accrue. face value less the interest that will accrue. maturity value of the note.
face value of the note.
Expert answered|margarita|Points 273|
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Asked 8/1/2012 7:41:01 PM
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Discuss how and why interest expense is allocated between measurement periods.
Weegy: interest expense is allocated between measurement periods because interest expense will be computed depending on how long the loan period will be and the loan amount. User: As a business manager should you be concerned when notes payable are used in funding the operations of the business? Weegy: Yes. Those notes payable, well, need to be paid back on time. [ Which means that as the business earns money (hopefully), those notes payable are another added bill that reduce the amount of money available for the business owner to withdraw as personal profit. Notes payable are typically short term notes, often used to bridge cash flow (working capital) needs on a short-term basis. They are often used to finance a portion of operations in cyclical / seasonal businesses. For example, let's say your company sells Christmas tree ornaments. You might draw on the loan in say August and September to build inventory, etc., and repay the loan during/after your "selling season" in December and January. These kinds of notes are often revolving lines of credit, that revolve (go up - i.e. draw on the loan, and down - repay the loan) in conjunction with seasonal selling cycles. They can also be used to help finance increased working capital needs when a company is growing very quickly, or has sudden increased demand for its products or services. Short of the above situations, using short term notes payable as a source of financing operations is generally not a good idea. Additional capital, whether in the form of additional equity or long-term debt should be secured. A company cannot use short term debt to indefinitely fund operations. Doing so implies that the cash flow from operations (vs. those from financing or investing) are insufficient to sustain the business as an ongoing enterprise. Eventually there will come a point where the company cannot afford to take on additional debt. They must raise additional equity or perish. Please leave a positive feedback ] ... (More)
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Asked 8/1/2012 7:23:46 PM
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7. How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year? (Points : 5) $300 $450 $900 $1,800
Weegy: $300 User: 10. The total that must be paid when a note becomes due is known as the (Points : 5) principle. face value. note value. maturity value. Weegy: maturity value User: 9. ABC company purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. To record this transaction, the accountant would debit (Points : 5) Equipment for $6,000 and credit Notes Payable for $6,000. Equipment for $6,180, credit Interest Expense for $180, and credit Notes Payable for $6,000. Equipment for $6,000, debit Interest Expense for $180, and credit Notes Payable for $6,180. Equipment for $6,000 and credit Accounts Payable for $6,000. Weegy: $13,530 (More)
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Asked 8/1/2012 7:44:20 PM
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