Which of the following would result when a company borrows cash and signs a note payable that is due in two years?
A)A noncurrent liability and an investing cash flow are created.
B)A noncurrent liability and a financing cash flow are created.
C)A current liability and an investing cash flow are created.
D)A current liability and a financing cash flow are created.

Question

Quizplus · Accepted Answer

When a company borrows cash and signs a note payable that is due in two years, a noncurrent liability and a financing cash flow are created. The liability is classified as noncurrent because it is due after one year from the balance sheet date. The cash flow is classified as financing because it involves raising funds from external sources.

Which of the Following Would Result When a Company Borrows