Module 5: Promissory Notes Flashcards

1
Q

This is a written promise by a maker/debitor to pay a payee/creditor an amount/principal/face value at a fixed determinable future time/maturity date, which may or may not include interest.

A

Promissory Note

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2
Q

The types of accounts interest can take.

A

Revenue (Payee) or Expense (Maker)

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3
Q

This is the percentage multiplied by the principal to gain the interest amount.

A

Interest Rate

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4
Q

This is the date of the note to maturity. (e.g. July 1-July 31 = 30 days)

A

Interest Period/Term of Note

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5
Q

This is the final payment due date.

A

Maturity Date

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6
Q

The amount that will be paid upon the maturity date.

A

Maturity Value = Principal/Face Value + Interest

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7
Q

What are the sources of promissory notes?

A

Rendered Services/Goods Sold - Notes Receivable (Dr), Sales/Service Income (Cr)

Settlement of Account - Accounts Receivable (Dr), Sales/Service Income (Cr) to Notes Payable (Dr), Accounts Receivable (Cr)

Loan Transaction - Notes Payable (Dr), Cash (Cr)

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8
Q

Interest/Discount

A

Principal x Rate x Time

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9
Q

Interest Bearing

A

Maturity Value = P + I

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10
Q

Non-Interest Bearing

A

Maturity Value = P - D

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