Accounting Notes Ch.8

Accounting Notes Ch.8 - Accounting Notes Chapter 8 Define...

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Accounting Notes Chapter 8 Define promissory note and explain its characteristics - A promissory note is an unconditional written promise to pay a definite sum of money on demand or at a future date. It must be in writing and signed by the maker It must contain an unconditional promise to pay a certain sum of money It may be payable to the bearer (person holding the note) or to a stated person (payee) It must be payable either on demand or at a specified future time It may or may not be interest bearing Make calculations for promissory notes - The m aturity d at e is the d ate in which the pay m ent of a note is due - Interest is the charge m a d e for the use of m on ey. It is an exp ens e to the borrower an revenu e to the lender - Simple interest is computed on the original principal (face value) of a note - INTEREST = Principle x Rate of interest x Time - The m aturity value of a note is the principal a mount of the note plus interest to m atu - MATURITY VALUE = Principal + Interest Compute the annu al effective interest rate on a note - Annual effective interest rate or annu al percentag e rate (APR) is the true interest rate
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This note was uploaded on 04/07/2008 for the course ENGL 111 taught by Professor Matt during the Spring '08 term at UConn.

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Accounting Notes Ch.8 - Accounting Notes Chapter 8 Define...

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