INTACC Midterm Exam | 100% Correct
Answers | Verified | Latest 2024 Version
On October 1 of the current year, an entity received a one year note receivable bearing interest at the
market rate. The face amount of the note receivable and the entire amount of interest are due on
September 30 of next year. The interest receivable on December 31 of the current year would consist of
an amount representing
a. Three months of accrued interest income
b. Nine months of accrued interest income
c. Twelve months of accrued interest income
d. The excess on October 1 of the present value of the note receivable over the face amount. - ✔✔a.
Three months of accrued interest income
On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At
that time, the market rate of interest was 10%. The face amount of the note and the entire amount of
interest are due on the date of maturity. Interest receivable on December 31 of the current year is
a. 5% of the face amount of the note
b. 4% of the face amount of the note
c. 5% of the present value of the note
d. 4% of the present value of the note - ✔✔b. 4% of the face amount of the note
On July 1 of the current year, an entity received a one-year note receivable bearing interest at the
market rate. The face amount of the note receivable and the entire amount of interest are due in one
year. The interest receivable amount would show a balance on
a. July 1 but not December 31
b. December 31 but not July 1
c. July 1 and December 31
d. Neither July 1 nor December 31 - ✔✔b. December 31 but not July 1
, On July of the current year, an entity received a one-year note receivable bearing interest at the market
rate. The face amount of the note receivable and the entire amount of the interest are due in one year.
When the note receivable was recorded on July 1, which of the following was debited?
a. Interest receivable
b. Unearned discount on note receivable
c. Interest receivable and unearned discount on note receivable
d. Neither interest receivable nor unearned discount on note receivable - ✔✔d. Neither interest
receivable nor unearned discount on note receivable
On July 1 of the current year, an entity received a one-year note receivable bearing interest at the
market rate. The face amount of the note receivable and the entire amount of the interest are due on
June 30 of next year. On December 31 of the current year, the entity should report in the statement of
financial position
a. A deferred credit for interest applicable to next year
b. No interest receivable
c. Interest receivable for the entire amount of the interest due on June 30 of next year
d. Interest receivable for the interest accruing in the current year - ✔✔d. Interest receivable for the
interest accruing in the current year
Why would an entity factor accounts receivable?
a. To improve the quality of credit granting process
b. To limit its legal liability
c. To accelerate access to amount collected
d. To comply with customer agreements - ✔✔c. To accelerate access to amount collected
Which of the following is a method to generate cash from accounts receivable?
Answers | Verified | Latest 2024 Version
On October 1 of the current year, an entity received a one year note receivable bearing interest at the
market rate. The face amount of the note receivable and the entire amount of interest are due on
September 30 of next year. The interest receivable on December 31 of the current year would consist of
an amount representing
a. Three months of accrued interest income
b. Nine months of accrued interest income
c. Twelve months of accrued interest income
d. The excess on October 1 of the present value of the note receivable over the face amount. - ✔✔a.
Three months of accrued interest income
On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At
that time, the market rate of interest was 10%. The face amount of the note and the entire amount of
interest are due on the date of maturity. Interest receivable on December 31 of the current year is
a. 5% of the face amount of the note
b. 4% of the face amount of the note
c. 5% of the present value of the note
d. 4% of the present value of the note - ✔✔b. 4% of the face amount of the note
On July 1 of the current year, an entity received a one-year note receivable bearing interest at the
market rate. The face amount of the note receivable and the entire amount of interest are due in one
year. The interest receivable amount would show a balance on
a. July 1 but not December 31
b. December 31 but not July 1
c. July 1 and December 31
d. Neither July 1 nor December 31 - ✔✔b. December 31 but not July 1
, On July of the current year, an entity received a one-year note receivable bearing interest at the market
rate. The face amount of the note receivable and the entire amount of the interest are due in one year.
When the note receivable was recorded on July 1, which of the following was debited?
a. Interest receivable
b. Unearned discount on note receivable
c. Interest receivable and unearned discount on note receivable
d. Neither interest receivable nor unearned discount on note receivable - ✔✔d. Neither interest
receivable nor unearned discount on note receivable
On July 1 of the current year, an entity received a one-year note receivable bearing interest at the
market rate. The face amount of the note receivable and the entire amount of the interest are due on
June 30 of next year. On December 31 of the current year, the entity should report in the statement of
financial position
a. A deferred credit for interest applicable to next year
b. No interest receivable
c. Interest receivable for the entire amount of the interest due on June 30 of next year
d. Interest receivable for the interest accruing in the current year - ✔✔d. Interest receivable for the
interest accruing in the current year
Why would an entity factor accounts receivable?
a. To improve the quality of credit granting process
b. To limit its legal liability
c. To accelerate access to amount collected
d. To comply with customer agreements - ✔✔c. To accelerate access to amount collected
Which of the following is a method to generate cash from accounts receivable?
