It's been a while since I've taken an accounting class and am wondering how the short-term interest-bearing note affords more time than the short-term zero-interest-bearing note to pay back the principal and interest? To my understanding, the Discount on Notes Payable is amortized to interest expense over the life of the note. Also, the Interest Payable is a current liability account that is used to report the amount of interest that has been incurred but has not yet been paid as of the date of the balance sheet. However, the amount not due within one year of the balance sheet date will be a Noncurrent Liability. Aren't Current Liabilities due within one year or within the operating cycle of a business whether interest-bearing or zero-interest-bearing?
Dear student, You are considering period of notes... View the full answer