Installment notes payable that require payments of accrued interest to date plus equal amounts of principal:
A) Result in periodic payments that gradually decrease in amount.
B) Result in increasing amounts of interest each period.
C) Result in periodic payments that gradually increase in amount.
D) Result in equal periodic payments.
E) Are not legal.

Question

Quizplus · Accepted Answer

The periodic payments decrease because the interest portion of each payment decreases as the principal balance is reduced with each payment.

Installment Notes Payable That Require Payments of Accrued Interest to Date