Which of the following statements pertaining to fixed-rate non-current Instalment Notes Payable is correct?
A) Blended payments result in the same amount of principal being paid at every payment date.
B) When blended payments are made, a progressively larger portion of the payment goes toward the principal while a progressively smaller portion of the payment goes toward the interest.
C) When blended payments are made, a progressively smaller portion of the payment goes toward the principal while a progressively larger portion of the payment goes toward the interest.
D) Blended payments do not apply to non-current Instalment Notes Payable.

Question

Quizplus · Accepted Answer

Blended payments for fixed-rate non-current installment notes payable involve a fixed payment amount for each period, where initially, a larger portion of the payment is applied to interest and a smaller portion to the principal. Over time, as the principal decreases, the interest portion of each payment decreases, and the principal portion increases, leading to a progressively larger portion of the payment going toward the principal and a progressively smaller portion going toward the interest.

Which of the Following Statements Pertaining to Fixed-Rate Non-Current Instalment