Anthony Loaned $2,000 to Cleopatra for One Year at 10

question 94

Multiple Choice

Anthony loaned $2,000 to Cleopatra for one year at 10% interest, all due at maturity. He insisted the terms of the transaction be formalized in a promissory note. In this situation:

• A) The maturity value of the note is $2,000.
• B) Anthony is considered the maker of the note and records the note as an asset in his accounting records.
• C) Anthony is considered the maker of the note and records the note as a liability in his accounting records.
• D) Cleopatra is considered the maker of the note and records the note as a liability in her [his] accounting records.

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Definitions:

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Par Value

The face value of a bond or stock, representing the nominal or original value as fixed in the certificate or instrument.

Market Value

The current price at which an asset or service can be bought or sold.

Treasury Stock-Common

Shares of a company's own stock that it has reacquired from shareholders and are considered issued but not outstanding.