On January 1, Year 1, Carlyle Corporation issued a five-year term note. The note requires an annual cash payment on December 31 of each year. The payment includes a principal reduction and interest. Indicate whether each of the following statements is true or false.
_____ a) The issuance of the note will increase assets and liabilities.
_____ b) The first payment on the note will reduce liabilities and assets, but will not affect equity.
_____ c) The second payment on the note will include higher interest expense than did the first payment.
_____ d) Each payment on the note includes a cash flow from operating activities and a cash flow from financing activities.
_____ e) The amount of reduction in liabilities will increase with each succeeding payment.

Question

Quizplus · Accepted Answer

The Answer of On January 1, Year 1, Carlyle Corporation issued a five-year term note. The note requires an annual cash payment on December 31 of each year. The payment includes a principal reduction and interest. Indicate whether each of the following statements is true or false.
_____ a) The issuance of the note will increase assets and liabilities.
_____ b) The first payment on the note will reduce liabilities and assets, but will not affect equity.
_____ c) The second payment on the note will include higher interest expense than did the first payment.
_____ d) Each payment on the note includes a cash flow from operating activities and a cash flow from financing activities.
_____ e) The amount of reduction in liabilities will increase with each succeeding payment.

On January 1, Year 1, Carlyle Corporation Issued a Five-Year