The entry to record the issuance of an interest-bearing note credits Notes Payable for the note's
A) maturity value.
B) market value.
C) face value.
D) cash realizable value.

Question

Quizplus · Accepted Answer

When an interest-bearing note is issued, the company incurs a liability in the form of Notes Payable. The face value of the note represents the amount borrowed by the company, and is therefore the amount credited to Notes Payable. The maturity value is the sum of the face value plus any interest owed at maturity, but this amount is not relevant when the note is initially issued. Market value and cash realizable value are not applicable to this transaction.

The Entry to Record the Issuance of an Interest-Bearing Note