How Will the Lender of the Promissory Note Record the Note

question 30

Multiple Choice

How will the lender of the promissory note record the note on its books?

• A)The promissory note will be recorded as an asset.
• B)The promissory note will be recorded as a contra asset.
• C)The promissory note will be recorded as revenue.
• D)The promissory note will be recorded as an expense.

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Definitions:

Yield to Maturity

The total return anticipated on a bond if held until it matures, including both interest payments and the appreciation or depreciation of the bond's value.

Coupon Rate

The interest rate stated on a bond or other fixed income security that the issuer promises to pay annually or semi-annually.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date, at a specified call price.

Market Interest Rate

The prevailing rate of interest available in the marketplace on comparable debt instruments, influencing the rates borrowers pay and lenders receive.