A short-term note payable with no stated rate of interest should be! a. recorded at maturity value. b. recorded at the face amount. c. discounted to its present value. d. reported separately from other short-term notes payable.

Question

Alvin Weaver

Business

30 June, 18:13

A short-term note payable with no stated rate of interest should be! a. recorded at maturity value. b. recorded at the face amount. c. discounted to its present value. d. reported separately from other short-term notes payable.

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Malone · Answer 1

A short-term note payable with no stated rate of interest should be discounted to its present value.

Option C

Explanation:

Short-term bills due are a legal contractual obligation to pay a particular amount within one year or during the same accounting period.

In other words, the term redemption, plus the interest on a certain date that will be one year or fewer in the future is a signed loan or promissory note between the creditor and the borrower.

Compared to a deposit, short-term payable notes are negotiable and can be exchanged by approving them between the parties.

Suppose, for example Bill lends $1,000 to Raj. Raj signs a promissory note indicating that he will have to pay $1,000 plus 10% interest in six months to Bill.

After the first month, Bill determines that he needs some of his loans to be combined and he endorses the Raj-Tony promissory note, which is to pay back Tony's debt. Raj is now required to pay Todd the $1,000 plus the interest.