The Face Value of a Note Is $10,000 with an Interest

question 47

Short Answer

The face value of a note is $10,000 with an interest rate of 8.5%. The time is based on 180 days in a 360-day year. The note has been discounted at 14% three months before the maturity of the note. How much are the proceeds?

Interpret the components and results of a bank reconciliation statement correctly.

Understand the definition and components of cash equivalents.

Differentiate between current assets, non-current assets, current liabilities, and non-current liabilities.

Identify financial instruments not considered as cash equivalents.

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Definitions:

Factory Equipment

Machinery and tools used in a manufacturing process to produce goods.

Indirect Material

Materials used in the production process that do not end up as part of the final product, such as lubricants for machinery.

Product Costs

Expenses directly associated with creating a product, including direct materials, direct labor, and manufacturing overhead costs.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.