Comfort Shoes Received a Promissory Note from a Customer on April

question 21

Multiple Choice

Comfort Shoes received a promissory note from a customer on April 1,2017.The face amount of the note is $2,000;the terms are 12 months and 8% annual interest.At the maturity date,the customer pays for the note and interest.Comfort Shoes made the proper adjustment at the end of December for interest.The effect of recognizing the transaction on the maturity date is a(n)

• A)decrease to Cash.
• B)increase to Notes Receivable.
• C)increase to Discount on Notes Receivable.
• D)decrease to Notes Receivable.

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Definitions:

Private Firms

Businesses that are privately owned, not traded publicly on stock exchanges, and typically managed by the owner or shareholders.

Public Good

Without profit motive, a product or service is made available to all societal members, courtesy of either governmental or private benefactors.

Nonrivalry

A characteristic of a good or service whereby its consumption by one individual does not reduce its availability for consumption by others.

Nonexcludability

The inability to keep nonpayers (free riders) from obtaining benefits from a certain good; a characteristic of a public good.