Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Periodic payments on installment notes typically include which of the following components?

Only principal

Only interest

Both principal and interest

Service fees only

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Verified step by step guidance

Understand the concept of installment notes: Installment notes are a type of loan where the borrower makes periodic payments over time to repay the loan. These payments typically consist of two main components: principal and interest.

Define principal: The principal is the original amount borrowed or the remaining balance of the loan that needs to be repaid. Each payment reduces the principal amount over time.

Define interest: Interest is the cost of borrowing money, calculated as a percentage of the outstanding principal. It compensates the lender for providing the loan.

Explain the structure of periodic payments: Each periodic payment on an installment note includes a portion allocated to reducing the principal and a portion allocated to paying the interest. The proportion of principal and interest changes over time, with more of the payment going toward principal as the loan progresses.

Clarify why service fees are not included: Service fees are separate charges that may be associated with the loan but are not part of the periodic payments. Periodic payments focus solely on repaying the principal and interest.