When a promissory note is issued,you would expect to find:
A)Notes payable and interest expense in the financial statements of the maker of the note throughout the life of the note.
B)Notes receivable and interest revenue in the financial statements of the maker of the note throughout the life of the note.
C)Notes receivable in the financial statements of the maker of the note throughout the life of the note,but interest revenue only when interest payments are received.
D)Notes payable in the financial statements of the payee of the note throughout the life of the note,but interest expense only when interest payments are made.

Question

Quizplus · Accepted Answer

When a promissory note is issued by an entity (the maker), it represents a liability for that entity. Therefore, "Notes Payable" would be recorded on its balance sheet, and as the entity incurs interest on this liability, "Interest Expense" would be recognized in its income statement throughout the life of the note.

When a Promissory Note Is Issued,you Would Expect to Find