Which of the following is not true about the discount on short-term notes payable?
A)The Discount on Notes Payable account has a debit balance.
B)The Discount on Notes Payable account should be reported as an asset on the balance sheet.
C)When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate.
D)All of these are true.

Question

Quizplus · Accepted Answer

The Discount on Notes Payable account should not be reported as an asset on the balance sheet. This account represents the amount of interest that has already been deducted from the face value of the note, so it should be reported as a contra-liability account instead.

Which of the Following Is Not True About the Discount