Choose the best answer for each of the following questions.

1			Which of the following statements is correct?
			A)	To be considered a negotiable instrument, a promissory note must specify an interest rate.
			B)	The amount shown on a note is called the face value.
			C)	A company that issued a 6-month note payable would report its face value on the balance sheet as a long-term liability.
			D)	All of the above statements are correct.
2			How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year?
			A)	$300.
			B)	$450.
			C)	$900.
			D)	$1,800.
3			The total that must be paid when a note becomes due is known as the
			A)	principle.
			B)	face value.
			C)	note value.
			D)	maturity value.
4			A 30-day note dated October 15, would be due on November
			A)	14.
			B)	15.
			C)	16.
			D)	17.
5			A one-month note dated October 15, would be due on November
			A)	14.
			B)	15.
			C)	16.
			D)	17.
6			A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. The entry to record this transaction would include a
			A)	debit to the Equipment account for $6,000 and a credit to the Notes Payable account for $6,000.
			B)	debit to the Equipment account for $6,180, a credit to the Interest Expense account for $180, and credit to the Notes Payable account for $6,000.
			C)	debit to the Equipment account for $6,000, a debit to the Interest Expense account for $180, and a credit to the Notes Payable account for $6,180.
			D)	debit to the Equipment account for $6,000 and credit to the Accounts Payable account for $6,000.
7			On January 2, Centrum Company signed a $20,000, 12 percent, 90-day note payable with the bank. The note was issued at a discount. The entry to record this transaction would include a
			A)	debit to the Cash account for $20,000 and credit to the Notes Payable—Bank for $20,000.
			B)	debit to the Cash account for $20,000, a debit to the Interest Payable account for $600, and a credit to the Notes Payable—Bank for $20,600.
			C)	debit to the Cash account for $19,600, a debit to the Interest Expense account for $600, and a credit to the Notes Payable—Bank for $20,000.
			D)	debit to the Cash account for $20,600 and a credit to the Notes Payable—Bank for $20,600.
8			If a note is not paid at maturity and there are no arrangements for renewal, the note is said to be
			A)	a draft.
			B)	an acceptance.
			C)	discounted.
			D)	dishonored.
9			On August 1, Abbitt Inc. needed cash to pay some bills. Kim Abbitt decided to discount a 60-day, noninterest-bearing note receivable for $100,000 that the business had received from Peter Houghton on July 1. The maturity date of the note is August 30. On August 1, Abbitt discounts the note at First National Bank. The bank's discount rate is 12 percent. The proceeds received from the bank equal
			A)	$1,000.
			B)	$99,000.
			C)	$100,000.
			D)	$101,000.
10			Which of the following statements is not correct?
			A)	A draft is a written order that requires one party (a person or business) to pay a stated sum of money to another party.
			B)	A bank draft is a check written by a bank that orders another bank to pay the stated amount to a specific party.
			C)	A cashier's check is a draft on the issuing bank's own funds. Cashier's checks are sometimes used to pay bills.
			D)	A commercial draft is payable on presentation.