Question

Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace's operating cycle is 14 months. This note would be considered a ______ on the balance sheet.

Answer 1

The note will be stated as a long term liability on the balance sheet of the company.

Step-by-step explanation:

Long term liability is the financial responsibility of the business which is due for more than a year in the future. The present portion of the long term debt which is separately listed in order to provide a more accurate view of the liquidity and the ability of the company to pay the current liabilities as they become due.

Company borrowed $10,000 from bank by singing a note of 2 year. This would be considered as the long term liability.