Chapter 4: T/F

Since a dishonored note is immediately removed from the books of a business, the maker no longer has a responsibility to pay.

False

If the proceeds of a discounted note are less than the face value, the difference is recorded as a credit to Interest Income.

False

The Notes Receivable Past Due account is a liability account.

False

The bank discount is added to the maturity value of a note.

False

When calculating the maturity date, always begin counting with the day the note is issued.

False

An adjusting entry must be made at the end of a fiscal period to record revenue that has been earned on a note receivable but not yet received and recorded.

True

Note Receivable Discounted is a contra asset accounts, therefore, if has a normal credit balance.

True

Promissory notes are usually used for credit transactions of more than 60 days.

True

Since notes receivable is an asset account, its normal balance is a debit.

True

The discount period on a note is always less than the term of the note.

True

The proceeds of a note is the amount of money the endorser "walks out" of the bank with after discounting a notes receivable.

True