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.

Question

Quizplus · Accepted Answer

With each succeeding payment on an installment note, the amount that goes toward decreasing the carrying value of the note (principal) increases. This is because the interest portion of the payment decreases as the principal balance decreases over time. Therefore, more of the payment goes toward reducing the principal balance of the note as time goes on.

In Each Succeeding Payment on an Installment Note