On January 1, 2014, Darek Corporation issued a five-year note payable. The note requires an annual cash payment on December 31 of each year, which includes a principal reduction and interest. Indicate whether each of the following statements is true or false.
1. The entry to record the note issuance will increase assets and liabilities
2. The second payment will include more interest expense than the first payment
3. The note is an installment note payable
4. Each payment will result in a decrease in cash flow from operating activities and an increase in cash flow from investing activities
5. The first payment will reduce liabilities and net income of Darek Corporation

Question

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The Answer of On January 1, 2014, Darek Corporation issued a five-year note payable. The note requires an annual cash payment on December 31 of each year, which includes a principal reduction and interest. Indicate whether each of the following statements is true or false.
1. The entry to record the note issuance will increase assets and liabilities
2. The second payment will include more interest expense than the first payment
3. The note is an installment note payable
4. Each payment will result in a decrease in cash flow from operating activities and an increase in cash flow from investing activities
5. The first payment will reduce liabilities and net income of Darek Corporation

On January 1, 2014, Darek Corporation Issued a Five-Year Note