When a company borrows cash from a bank promising to repay the amount borrowed plus interest,the borrower reports its liability as notes payable.

Question

Quizplus · Accepted Answer

This statement is true. When a company borrows cash from a bank, it is typically done through a promissory note or other loan agreement, which creates a liability for the borrower. This liability is reported as notes payable on the balance sheet, and the borrower is required to make periodic interest payments on the borrowed amount in addition to repaying the principal amount borrowed.

When a Company Borrows Cash from a Bank Promising to Repay