The amortization of the discount on a note payable has what effect on a company's financial statements?
A)Increases interest expense and increases liabilities.
B)Decreases interest expense and increases liabilities.
C)Increases interest expense and decreases liabilities.
D)Decreases interest expense and decreases liabilities.

Question

Quizplus · Accepted Answer

Amortizing a discount on a note payable increases interest expense and increases liabilities by decreasing the discount on notes payable, a contra-liability.

The Amortization of the Discount on a Note Payable Has