Question

Howard Corporation issued a 20-year mortgage note payable on January 1. On December 31, the unpaid principle balance will be reported as:_______.
a. part current and part long-term liability.
b. a current liability.
c. a long-term liability.
d. interest payable.

Answer 1

Answer:

c. a long-term liability.

Explanation:

Short term liabilities are those liabilities which need to be paid within one year time and Long term liabilities are those liabilities which need to be paid after one year time.

In this question on December 31, Howard Corporation need to pay the principal in 19 years from now, as it it a long period, so amount of principal will be classified as a long-term liability.