The Journal Entry to Record the Issuance of a Note

question 76

Multiple Choice

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

• A) debit Cash; credit Accounts Payable
• B) debit Accounts Payable; credit Cash
• C) debit Cash; credit Notes Payable
• D) debit Accounts Payable; credit Notes Payable

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Definitions:

Promoter

A person who incorporates a business, organizes its initial management, and raises its initial capital.

Preincorporation Contract

An agreement made by the incorporators or promoters of a company on behalf of the company before it has been legally formed.

Liable

Legally responsible or obligated to compensate for harm, loss, or damage caused by one's actions or omissions.

Capitalize

The accounting practice of recording a cost or expense on the balance sheet for the purposes of delaying full recognition of the expense over time through depreciation or amortization.