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Financial Accounting

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Notes Payable: Current vs Noncurrent

FINACT-UYSMWC

Which of the following is true regarding the manner in which a Notes Payable amount should be presented on a company’s Balance Sheet at the end of the accounting period?

A

A Notes Payable amount should be recorded as a non-current liability at the end of the accounting period no matter when the principal payment related to the note is to be paid.

B

A Notes Payable amount should be recorded as a current liability at the end of the accounting period no matter when the principal payment related to the note is to be paid.

C

A Notes Payable amount should be recorded as a current liability at the end of the accounting period if the principal payment is due within one year and as a non-current liability if the principal payment is due after one year.

D

A Notes Payable amount should be recorded as a current liability at the end of the accounting period if the company plans to pay the principal with one year and as a non-current liability if the company plans to pay the principal after one year.