Question

On October 2, 2017, a company borrowed cash and signed a 3-year, interest-bearing note on which both the principal and interest are payable on October 2, 2020. At December 31, 2019, the principal and accrued interest should:

Answer 1

Answer:

be reported on the balance sheet as current liabilities

Explanation:

The term debt, which is the portion of long term liabilities that is included as current liabilities, must include all the payments that are due within the next accounting period.

In this case, the company must pay both the principal and the interests on the note payable by October 2, 2020, so it must include all the principal + the accrued interest (up to December 31, 2019) as part of current liabilities.