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Indicate Whether Each of the Following Statements Is True or False

Question 46

Matching

Indicate whether each of the following statements is true or false.

Premises:

Responses:

In a promissory note,the payee issues the note to the maker.

False

The major difference between treating the extension of credit to a customer as accounts receivable and treating it as notes receivable is the existence of interest.

True

Interest rates are always stated on an annual basis,regardless of the length of the note.

Loaning cash to another company is considered a financing activity on the statement of cash flows.

Accruing interest on a note receivable is considered an asset use transaction.

Premises:

In a promissory note,the payee issues the note to the maker.

The major difference between treating the extension of credit to a customer as accounts receivable and treating it as notes receivable is the existence of interest.

Interest rates are always stated on an annual basis,regardless of the length of the note.

Loaning cash to another company is considered a financing activity on the statement of cash flows.

Accruing interest on a note receivable is considered an asset use transaction.

Responses:

False

True

Correct Answer:

Premises:

Responses:

In a promissory note,the payee issues the note to the maker.

The major difference between treating the extension of credit to a customer as accounts receivable and treating it as notes receivable is the existence of interest.

Interest rates are always stated on an annual basis,regardless of the length of the note.

Loaning cash to another company is considered a financing activity on the statement of cash flows.

Accruing interest on a note receivable is considered an asset use transaction.

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