Among the short-term obligations of Larsen Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Dennison National Bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Larsen Company as

Question

Quizplus · Accepted Answer

The notes payable are due within 90 days and therefore are considered a current liability. The fact that they are renewable for another 90-day period does not change their classification as a current liability because the renewal is not guaranteed and the company cannot rely on it.

Among the Short-Term Obligations of Larsen Company as of December