In each succeeding payment on an installment note:
A)The amount of interest expense increases.
B)The amount of interest expense decreases.
C)The amount of interest expense is unchanged.

Question

Quizplus · Accepted Answer

In an installment note, each payment includes both a portion of the principal and a portion of the interest. As the principal is reduced with each payment, the amount of interest charged on the remaining balance decreases. Therefore, the amount of interest expense decreases with each succeeding payment.

In Each Succeeding Payment on an Installment Note