A Mortgage Note Payable with a Fixed Interest Rate Requires

question 224

Multiple Choice

A mortgage note payable with a fixed interest rate requires the borrower to make installment payments over the term of the loan. Each installment payment includes interest on the unpaid balance of the loan and a payment on the principal. With each installment payment, indicate the effect on the portion allocated to interest expense and the portion allocated to principal. Portion Allocated Portion Allocated
To Interest Expense to Payment of Principal

• A) Increases Increases
• B) Increases Decreases
• C) Decreases Decreases
• D) Decreases Increases

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