A Five-Year, 6%, $50,000 Note Payable Is Issued on January

question 119

Multiple Choice

A five-year, 6%, $50,000 note payable is issued on January 1. Terms include fixed annual principal payments of $10,000, plus interest on the outstanding balance. The entry to record the first instalment payment will include a

• A)debit to Notes Payable of $10,000.
• B)credit to Interest Expense of $3,000.
• C)credit to Notes Payable of $13,000.
• D)debit to Cash of $10,000.

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Definitions:

Marginal

Relating to the change or difference resulting from a slight incremental increase or decrease in a variable's level.

Economic Variable

A measurable quantity that represents a component of economic performance or behavior, such as GDP, unemployment rate, or inflation.

Rational Decision Makers

Individuals or organizations that make choices that maximize their utility, based on systematic analysis of options and outcomes.

Expected Marginal Benefit

The additional benefit perceived by a consumer or producer from consuming or producing one more unit of a good or service.