QUESTION 2 Payments on notes payable consist of two components: principal and interest. For a notes payable arrangement with fixed payments, with each payment that is made, the amount applied to the principal (increases / decreases) over time. QUESTION 3 Match the term with the correct definition. Bond Discount A. Occurs when the stated bond rate is more than the market rate v Bond Premium B. Occurs when the stated bond rate is less than the market rate Face Value C. The amount the company receives when issuing the bond v Cash Proceeds from Issuance of Bonds D. The amount due at the bond's maturity date