The Journal Entry a Company Uses to Record the Payment

question 138

Multiple Choice

The journal entry a company uses to record the payment of a discounted note is

• A) debit Notes Payable and Interest Expense; credit Cash
• B) debit Notes Payable; credit Cash
• C) debit Cash; credit Notes Payable
• D) debit Accounts Payable; credit Cash

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Definitions:

Previously Undisclosed Principal

A principal whose identity was not revealed by the agent at the time of entering into a contract with a third party.

Third Party

An entity that is not directly involved in a transaction or contract but may be affected by it or may have interests that are affected.

Constructive Notice

Notice of agency termination that is usually given by publishing an announcement in a newspaper.

Agency Termination

The act of ending the relationship between an agent and their principal, which can occur for various reasons including mutual agreement, achievement of the agency's purpose, or breach of contract.