Which of the following statements is correct?
A)To be considered a negotiable instrument, a promissory note must specify an interest rate.
B)The amount stated on a note is called the face value.
C)A company that issued a 6-month note payable would report its face value on the balance sheet as a long-term liability.
D)A note payable must be payable at a specific time in the future.

Question

Quizplus · Accepted Answer

Option A is incorrect because a promissory note does not have to specify an interest rate to be considered negotiable. Option C is incorrect because a 6-month note payable would be reported as a short-term liability on the balance sheet, not a long-term liability. Option D is incorrect because a note payable can be payable on demand or at a specific time in the future. The correct statement is option B, as the amount stated on a note is indeed called the face value.

Which of the Following Statements Is Correct