A Business Makes a Payment of $1,400 on a Note

question 156

Multiple Choice

A business makes a payment of $1,400 on a note payable, consisting of a $200 interest payment and a $1,200 principal payment. Which of the following journal entries would be recorded?

• A)Cash is credited for $1,200; Interest Expense is credited for $200; and Notes Payable is debited for $1,400.
• B)Notes Payable is credited for $1,200; Cash is credited for $200; and Interest Expense is debited for $1,400.
• C)Cash is credited for $1,400; Notes payable is debited for $1,200; and Interest Expense is debited for $200.
• D)Notes Payable is credited for $1,400; Cash is debited for $1,200; and Interest Expense is debited for $200.

Distinguish between criterion-related validity, construct validity, and content validity.

Relate the importance of validity to the overall integrity of a research study or assessment.

Develop the ability to critically evaluate the validity of a test or research measurement.

Understand how validity impacts the interpretation of research findings.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one product for another.

Income Effect

Economic principle that describes how a change in an individual's income affects their purchasing behavior.

Interest Rate

The percentage charged on a loan or paid on savings over a certain period of time, essentially the cost of borrowing money or the reward for saving.

Optimal Choice

The most efficient, advantageous selection or decision based on available information and constraints.