Question

Is a zero-interest bearing note recorded at its present value?
1) true
2) false

Answer 1

Yes, a zero-interest bearing note is recorded at its present value.

Step-by-step explanation:

When recording a zero-interest bearing note, it is typically recorded at its present value. The present value represents the current worth of the note's future cash flows, taking into account the time value of money. In the case of a zero-interest bearing note, where no explicit interest payments are made, the present value would be equal to the amount borrowed or the face value of the note.

For example, if a company issues a zero-interest bearing note with a face value of $5,000, the present value of the note would also be $5,000.

Therefore, the statement is true.