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

Notes payable due in six months are reported as:

Current liabilities

Long-term liabilities

Non-current assets

Owner's equity

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Verified step by step guidance

Understand the definition of notes payable: Notes payable are written promises to pay a specific amount of money at a future date. They are considered liabilities because they represent obligations owed by the company.

Differentiate between current and long-term liabilities: Current liabilities are obligations that are due within one year or the operating cycle, whichever is longer. Long-term liabilities are obligations that are due beyond one year.

Analyze the time frame of the notes payable: The problem states that the notes payable are due in six months. Since six months is less than one year, this obligation falls under the category of current liabilities.

Review the classification of other options: Non-current assets refer to long-term resources like property, plant, and equipment, which are not liabilities. Owner's equity represents the residual interest in the assets of the company after deducting liabilities, which is also not applicable here.

Conclude that notes payable due in six months are classified as current liabilities because they are obligations that must be settled within the next year.