Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Notes Payable

Financial Accounting

9. Current Liabilities

Notes Payable

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Multiple Choice

Which of the following is a key event in accounting for notes payable?

Revaluation of inventory

Payment of interest and principal at maturity

Declaration of dividends

Issuance of the note

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Verified step by step guidance

Understand the concept of notes payable: Notes payable are written agreements where a borrower promises to pay a specific amount of money at a future date, often with interest. They are classified as liabilities on the balance sheet.

Identify the key events associated with notes payable: These typically include issuance of the note, accrual of interest, payment of interest, and repayment of the principal amount at maturity.

Analyze the options provided: Revaluation of inventory and declaration of dividends are unrelated to notes payable. Payment of interest and principal at maturity is a key event, but the issuance of the note is the first and foundational event in accounting for notes payable.

Focus on the issuance of the note: When a note is issued, the borrower records the liability by debiting cash (or another asset account) and crediting notes payable. This establishes the obligation to repay.

Conclude that the issuance of the note is the correct answer: It is the initial event that sets the stage for all subsequent accounting activities related to the note payable.