Over the life of a note payable,the amount of interest expense allocated to each period is calculated by:
A) Multiplying the interest rate at issuance of the note by the beginning-of-period balance of the note.
B) Dividing the interest rate at issuance of the note by the beginning-of-period balance of the note.
C) Multiplying the interest rate at issuance of the note by the end-of-period balance of the note.
D) Multiplying the market interest rate at issuance of the note by the beginning-of-period balance of the note.
E) Multiplying either the interest rate or the market interest rate at issuance of the note by the beginning-of-period balance of the notE.

Question

Quizplus · Accepted Answer

The amount of interest expense allocated to each period is calculated by multiplying the interest rate at issuance of the note by the beginning-of-period balance of the note. This is because interest expense is calculated based on the principal amount of the note that is outstanding during the period, which is the beginning-of-period balance. Therefore, choice A is the correct answer.

Over the Life of a Note Payable,the Amount of Interest