Which of the Following Correctly Describes an Installment Note

question 28

Multiple Choice

Which of the following correctly describes an installment note?

• A)An installment note requires equal interest payments with the entire principal balance paid at maturity.
• B)An installment note requires equal payments of interest and principal in which the amount of interest decreases over the life of the note.
• C)An installment note requires equal payments of interest and principal in which the amount of interest increases over the life of the note.
• D)The installment note requires decreasing payments of interest and principal in which the amount of interest remains constant over the life of the note.

---

Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) for international use.

Deferred Taxes

Taxes that are incurred in one period but are not paid until a future period, often due to timing differences between accounting and tax reporting.

Taxable Entity

A business or individual that is required to pay taxes to a federal, state, or local government.

Permanent Difference

These are differences between taxable income and accounting income that originate in one period and do not reverse over time, affecting taxable income and tax liability.