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Chapter 4 Review
Notes Receivable
26
Accounting
Not Applicable
10/18/2004

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Cards

Term
Promissory Note
Definition
written promise to pay a certain sum of money on a specific date
Term
Principal
Definition
the amount being borrowed
Term
Maturity Date
Definition
specific day on which the note must be paid
Term
Term
Definition
the length of time the borrower has to repay the note
Term
Face Value
Definition
the amount written on the facoe of the note
Term
Payee
Definition
the person or business to whom the note is payable
Term
Interest
Definition
fee charged for the use of money
Term
Maker
Definition
the person promising to repay the principal plus interest
Term
Interest-Bearing Note
Definition
a note that requires the principal plus interest to be repait at maturity
Term
Notes Receivable
Definition
a promissory note that a business accepts from a customer
Term
Maturity date
Definition
the period of time between the date the note receivable is sold to the bank and the maturity date of the note
Term
Accrual Basis of Accounting
Definition
recognizes revenue when earned and expenses when incurred
Term
Protest Fee
Definition
the bank charge to the endorser for a dishonored, discounted note
Term
Proceeds
Definition
the maturity value minus the bank discount
Term
Contingent Liability
Definition
exists when the endorser of a discounted note agrees to pay the note at maturity if it is not paid by the maker
Term
Bank Discount
Definition
interest charge the bank deducts in advance at the time the note is issued
Term
Accrued Revenue
Definition
revenue earned but not yet received or recorded
Term
Dishonored Note
Definition
note that is not paid or renewed at the maturity date
Term
Discounting Notes Receivable
Definition
selling notes receivable to a bank for cash rather than holding them until maturity
Term
Issue Date
Definition
date on which the note is written
Term
Maturity Value
Definition
the principal plus the interest that must be paid
Term
Conservatism Principle
Definition
the accountant is conservative when reporting the financial condition of a company
Term
Draft
Definition
order by by one party (drawer) to another party (drawee) to pay a certain sum of money to a third party (payee)
Term
Interest Rate
Definition
the amount of interest expressed as a percentage of the principal
Term
Negotiable Intrusment
Definition
financial document that transfers ownership from one person to another
Term
Notes Receivable Past Due
Definition
note that has been dishonored
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