The Journal Entry Used to Record the Issuance of an Interest-Bearing

question 42

Multiple Choice

The journal entry used to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

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

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Definitions:

Double-Declining Balance

An accelerated method of depreciation that doubles the rate at which an asset's book value is reduced over time, reflecting quicker loss of value.

Straight-Line Depreciation

A technique for apportioning the price of a physical asset over its effective duration in steady annual portions.

Salvage Value

The expected salvage value of an asset after it has served its useful life.

Service Life

The expected period during which an asset remains usable, functional, or productive before it requires replacement or major repair.