Module 5: Promissory Notes

Question 1

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.

Answer 1

Promissory Note

Question 2

The types of accounts interest can take.

Answer 2

Revenue (Payee) or Expense (Maker)

Question 3

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

Answer 3

Interest Rate

Question 4

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

Answer 4

Interest Period/Term of Note

Question 5

This is the final payment due date.

Answer 5

Maturity Date

Question 6

The amount that will be paid upon the maturity date.

Answer 6

Maturity Value = Principal/Face Value + Interest

Question 7

What are the sources of promissory notes?

Answer 7

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)

Question 8

Interest/Discount

Answer 8

Principal x Rate x Time

Question 9

Interest Bearing

Answer 9

Maturity Value = P + I

Question 10

Non-Interest Bearing

Answer 10

Maturity Value = P - D