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

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following is FALSE regarding long-term notes payable?

Long-term notes payable are classified as current liabilities on the balance sheet.

Interest expense on long-term notes payable is typically recognized over the life of the note.

They are obligations that are due more than one year from the balance sheet date.

The principal amount of a long-term note payable is repaid at maturity or in installments over time.

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Verified step by step guidance

Step 1: Understand the concept of long-term notes payable. These are financial obligations that a company owes and are due more than one year from the balance sheet date. They are classified as long-term liabilities unless they are due within the next year, in which case they are reclassified as current liabilities.

Step 2: Review the classification of liabilities on the balance sheet. Long-term notes payable are not classified as current liabilities unless the repayment is due within the next year. This is a key distinction between current and long-term liabilities.

Step 3: Examine how interest expense is recognized for long-term notes payable. Interest expense is typically accrued and recognized periodically over the life of the note, reflecting the cost of borrowing.

Step 4: Analyze the repayment structure of long-term notes payable. The principal amount can either be repaid at maturity (a lump sum payment) or in installments over time, depending on the terms of the note.

Step 5: Identify the false statement by comparing the options provided with the correct accounting treatment of long-term notes payable. The statement 'Long-term notes payable are classified as current liabilities on the balance sheet' is false because they are classified as long-term liabilities unless due within the next year.