When Preparing an Amortization Schedule,the Interest Expense Increases Each Year

question 47

True/False

When preparing an amortization schedule,the interest expense increases each year because the principal decreases with each installment payment.

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Definitions:

Temporary/Permanent

In accounting, this distinction categorizes accounts based on their persistence; temporary accounts reset each cycle, while permanent accounts carry their end balance into the next period.

Accrued Interest

Interest that has been incurred but not yet paid, often associated with bonds and loans.

Note Payable

A financial liability representing a written promissory note to pay a specific sum of money to another entity on a specific future date or on demand.

Debit/Credit

Accounting terms where a debit increases asset or expense accounts, and decreases liability, revenue or equity accounts; a credit does the opposite.