What is the correct classification of the account Discount on Notes Payable?
A)An asset
B)An expense
C)A revenue
D)A contra liability

Question

Quizplus · Accepted Answer

Discount on Notes Payable is a contra liability account. It is used to reduce the carrying value of the Notes Payable to its present value when the interest rate of the note is lower than the market rate of interest at the time of issuance.

What Is the Correct Classification of the Account Discount on Notes