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Turn your notes payable chapter into a practice quiz

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How notes payable questions are usually tested

Working through a notes payable quiz helps with one of the more error-prone topics in introductory accounting. Students often confuse the principal with the interest, or forget that interest accrues over time rather than only when cash changes hands. Questions usually ask you to record the original borrowing, calculate interest for a partial period, or classify the amount due as current or long-term.

Debit Cash and credit Notes Payable for the principal when the loan is received.
Accrued interest is recorded as interest expense and interest payable, not as a payment.
Principal due within one year is a current liability; the rest is long-term.
Paying off a note at maturity reduces both Notes Payable and Cash by the principal amount.

Example notes payable practice questions

A company signs a 12-month, 8% note for $20,000 from a bank. Which account is credited when the cash is received?Notes Payable is credited for $20,000, because the company owes the principal back to the bank.

True or false: interest on a note payable is recorded as an expense as it accrues, not only when it is paid.True. Interest expense is recognized over the period the borrowing covers, so it matches the cost to that period.

A $10,000, 6% note has six months left at year end. How much interest should be accrued?$300. Annual interest of $600 is prorated for six months and recorded as interest payable.

Where does principal due within 12 months of the balance sheet date appear?As a current liability, because amounts due within one year are separated from the long-term portion.

What is the journal entry when a $15,000 note payable is repaid at maturity, ignoring interest?Debit Notes Payable $15,000 and credit Cash $15,000, since repaying principal reduces both the liability and cash.

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Questions from your material

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Three question types

Multiple-choice, true/false and open-ended questions let you test recognition first, then recall, then application.

Explanations for each answer

When you miss a question, the explanation shows the journal entry or calculation behind the correct answer so you can see where your reasoning went wrong.

How it works

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Study and review

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Quizzes work best when they mirror those tasks. Multiple-choice items test whether you can pick the right account, true/false items catch common misconceptions, and open questions force you to write out the entry and the reasoning. Reviewing the explanation after each miss is where most of the learning happens.

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Frequently asked questions

How do you record a note payable when it is issued?

Debit Cash and credit Notes Payable for the amount borrowed. Interest then builds up as interest expense and interest payable until it is paid.

How is interest on a note payable calculated?

Multiply the principal by the annual rate and by the fraction of the year that has passed. A $10,000 note at 6% outstanding for six months accrues $300 of interest.

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Yes. The free plan includes 3 generations per month and studying in the browser, and no credit card is needed to start, though exports are not included.

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