What journal records cash payment of a promissory note?

What journal records cash payment of a promissory note?

• A. Cash Receipts
• B. General
• C. Sales
• D. Cash Payments

Answer: (D)

The journal that records cash payments of a promissory note is the Cash Payments journal. This journal is specifically designed to track all transactions involving cash outflows from the business. When a business pays off a promissory note, it involves an outflow of cash, so this transaction is recorded in the Cash Payments journal to accurately reflect the decrease in cash and the reduction of liabilities related to the note. This is particularly critical for maintaining clear financial records, as it allows for easy tracking of how much cash has been paid out in relation to liabilities such as loans or promissory notes. By using the Cash Payments journal, organizations ensure they have a comprehensive view of their cash payments, which is essential for cash flow management and financial reporting.

The journal that records cash payments of a promissory note is the Cash Payments journal. This journal is specifically designed to track all transactions involving cash outflows from the business. When a business pays off a promissory note, it involves an outflow of cash, so this transaction is recorded in the Cash Payments journal to accurately reflect the decrease in cash and the reduction of liabilities related to the note.

This is particularly critical for maintaining clear financial records, as it allows for easy tracking of how much cash has been paid out in relation to liabilities such as loans or promissory notes. By using the Cash Payments journal, organizations ensure they have a comprehensive view of their cash payments, which is essential for cash flow management and financial reporting.