For a ten-year installment note, the portion of the periodic installment payment that represents interest in the third year is:

A) The same as in the fourth year.

B) The same as in the first year.

C) Less than in the fourth year.

D) More than in the fourth year.

Answer: D

In each succeeding payment on an installment note:

A) The amount of interest expense increases.

B) The amount of interest expense decreases.

C) The amount of interest expense is unchanged.

D) The amounts paid for both interest and principal increase proportionately.

Answer: B

Profits generated by the company are a(n):

A) Source of external financing.

B) Source of internal financing.

C) Liability.

D) Asset.

Answer: B