24 terms

Chapter 20

STUDY
PLAY
Promissory Note
A written and signed promise to pay a sum of money
Date of a Note
The day a note is issued
Time of a Note
The days, months, or years from the date of issue until a note is to be paid in full
Payee of a Note
The person to whom a note is payable
Principal of a Note
The amount a borrower promises to pay--the face of a note
Interest Rate of a Note
The percentage of the principal that is paid for use of the money.
Maturity Date of a Note
The date a note is due.
Maker of a Note
The person who signs a note and thus promises to make payment.
Number of a Note
The number assigned by the maker to identify a specific note.
Interest
An amount paid for the use of the principal of a note for a period of time.
Interest-Bearing Note
Promissory notes that contain a provision for the payment of interest.
Non-Interest Bearing Note
Promissory notes that DO NOT contain a provision for the payment of interest.
Maturity Value
The principal plus the interest on a note.
Notes Payable
Promissory notes that a business gives creditors.
Bank Discount
Interest on a note collected in advance by bank.
Proceeds
The amount received for a note after the bank has deducted the bank discount.
Discounted Note
A note on which interest is paid in advance.
Notes Receivable
Promissory notes that a business accepts from customers.
Dishonored Note
A note that is not paid when due.
Creditor
A person or organization to whom a liability is owed.
Current Liabilities
Liabilities due within a short period of time, usually a year.
Interest Expense
The interest accrued on money borrowed.
Interest Income
The money earned on money loaned.
Find interest 90 day interest bearing note, 6% for $2000
2,000(principal) x .06(rate) x 90/360(length of time) Interest = $30, Maturity value = $2030.00