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Each time a payment is made on an installment note, the portion of the next payment associated with notes payable increases. This statement is false. The correct answer is B.
The principle amount of an installment note is partially decreased by a portion of each payment. With each additional payment, the amount of interest paid decreases (rather than grows) because the principal balance decreases while the interest rate remains constant. This is why Each time a payment is made on an installment note, the portion of the next payment associated with notes payable increases is false statement.
The cost of borrowing money is referred to as "interest expenditure." It represents the fee a lender charges a borrower for using their funds. On the income statement, the cost of borrowing money from banks, bond holders, and other sources can be displayed as interest expenditure.
An entity's interest expense is their cost of borrowing money. On the income statement, interest costs are listed as a non-operating item. This word denotes the interest payable on all borrowings, including bonds, loans, and convertible debt.
Your question is incomplete but most probably your full question is
Each time a payment is made on an installment note, the portion of the next payment associated with notes payable increases. this statement is: _________
a. True
b. False
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