Question

Notes payable are only classified as short-term.
1) true
2) false

Answer 1

Notes payable can be both short-term and long-term liabilities depending on the terms of the arrangement.

Step-by-step explanation:

Notes payable are not only classified as short-term. They can be both short-term and long-term liabilities depending on the terms of the arrangement.

Short-term notes payable are typically due within one year or less, while long-term notes payable have a term greater than one year. Examples of short-term notes payable include bank loans, lines of credit, and trade notes payable, which are debts owed to suppliers for purchases made on credit.

On the other hand, long-term notes payable may include mortgages, bonds, or installment loans that have a repayment period extending beyond one year.