It is December 31,2014.A Note Payable is due in five annual installments beginning on December 31,2015.On the balance sheet dated December 31,2014,the Note Payable is classified as ________.
A) current liability only
B) long-term liability only
C) current and long-term liability
D) owners' equity

Question

Quizplus · Accepted Answer

The Note Payable is due in five annual installments, beginning on December 31, 2015. Therefore, the portion of the Note Payable that is due within one year from the balance sheet date (December 31, 2014) is classified as a current liability. The remainder of the Note Payable that is due beyond one year is classified as long-term liability. Hence, the correct classification for the Note Payable on the balance sheet dated December 31, 2014 is current and long-term liability.

It Is December 31,2014