In discounting a note payable, the principal of the loan left after the discount has been subtracted is called the _____.
A) proceeds
B) discounted principal
C) net principal
D) maturity value

Question

Quizplus · Accepted Answer

The amount received by the borrower after the discount has been subtracted is called the proceeds. This is the actual amount of cash that the borrower receives from the lender. The discounted principal is the original principal amount of the loan minus the discount. Net principal is not a standard term used in discounting notes payable. Maturity value is the total amount of the loan including interest that is due at maturity.

In Discounting a Note Payable, the Principal of the Loan