The Payee of the Note Records Interest on a Note

question 176

True/False

The payee of the note records interest on a note receivable as interest revenue.

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Definitions:

Net Income

Total earnings of a company after all expenses and taxes have been deducted from total revenue.

Note Receivable

A financial asset representing a written promise for a debtor to pay a specified sum of money to the creditor on a demand or at a future date.

Financing Activities

Activities that result in changes in the size and composition of the equity capital or borrowings of the entity, reflected in its cash flows.

Principal Collection

refers to the portion of payments received that goes towards reducing the outstanding principal balance of a loan.