How does the amortization schedule for an installment note such as a car loan differ from an amortization schedule for bonds?

A) The final carrying value is not zero in either amortization schedule.

B) The final carrying value is zero in an amortization schedule for bonds.

C) The final carrying value is zero in both amortization schedules.

D) The final carrying value is zero in an amortization schedule for an installment note.

Answer: D

Which of the following describes monthly installment payments of a note payable?

A) The monthly payments equal interest expense plus the reduction of the note's carrying value.

B) The amount of interest expense recorded each month increases over time.

C) The amount of the reduction in the note's carrying value recorded each month decreases over time.

D) All of the other answer choices are correct.

Answer: A

In each succeeding payment on an installment note:

A) The amount that goes to decreasing the carrying value of the note increases.

B) The amount that goes to decreasing the carrying value of the note decreases.

C) The amount that goes to decreasing the carrying value of the note is unchanged.

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

Answer: A