Loans from commercial banks generally appear on balance sheets as notes payable.A bank's importance is actually greater than it appears from the dollar amounts shown on balance sheets because banks provide nonspontaneous funds to firms.

Question

Quizplus · Accepted Answer

This statement is true. Loans from commercial banks are recorded on balance sheets as notes payable, but banks also provide nonspontaneous funds (such as lines of credit and overdraft protection) that are not reflected on balance sheets but are still important sources of funding for many firms.

Loans from Commercial Banks Generally Appear on Balance Sheets as Notes