Which of the following statements is correct?
A) To be considered a negotiable instrument,a promissory note must specify an interest rate.
B) The amount shown on a note is called the face value.
C) A company that issued a 6-month note payable would report its face value on the balance sheet as a long-term liability.
D) A note payable must be payable at a specific time in the future.

Question

Quizplus · Accepted Answer

The amount shown on a note is indeed called the face value. A promissory note does not necessarily have to specify an interest rate to be considered negotiable, and whether a note payable is reported as a short-term or long-term liability on the balance sheet depends on its due date, not its face value. However, it is true that a note payable must be payable at a specific time in the future.

Which of the Following Statements Is Correct