The Notes Receivable Discounted Account

question 31

Multiple Choice

The Notes Receivable Discounted account

• A) is shown as a deduction from Notes Receivable on the balance sheet.
• B) has a debit balance.
• C) is used to record the amounts due on dishonored notes.
• D) is used to record the amount of interest deducted by the bank when a note is discounted.

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Definitions:

Market Rates

are the prevailing interest rates or prices for services, securities, or commodities in the open market.

Premium

The amount paid for an insurance policy or the amount by which a bond or stock sells above its face value.

Par

Par value, often referred to simply as "par," is the face value of a bond or the stock value stated in the corporate charter, not necessarily its market value.

Bond Prices

The amount of money for which bonds are bought and sold in the market, influenced by factors such as interest rates, supply, and demand.