For an interest bearing note payable, the amount borrowed is equal to the face amount of the note.

Question

Quizplus · Accepted Answer

The face amount of the note is the amount that the borrower agrees to repay at the maturity date, which includes both the principal amount borrowed and the interest to be paid over the life of the note. Therefore, for an interest-bearing note payable, the amount borrowed (i.e. principal) is only a portion of the face amount, with the remainder consisting of the interest expense.

For an Interest Bearing Note Payable, the Amount Borrowed Is