In a noninterest-bearing note,the amount borrowed is which of the following?
A)face value of the note
B)face value of the note less the discount on note payable
C)face value of the note plus a premium on the note payable
D)face value of the note less interest expense calculated at the face rate of interest

Question

Quizplus · Accepted Answer

In a noninterest-bearing note, the amount borrowed is the face value of the note less the discount on note payable. This discount represents the interest that is effectively pre-paid or embedded in the note, as these notes do not explicitly charge interest in a separate transaction.

In a Noninterest-Bearing Note,the Amount Borrowed Is Which of the Following