Question

True or False ....

When a long-term note payable that requires annual installment payments is initially recorded, it is first recorded as a long-term note payable.  Then, at the same date, a second entry is made to reclassify the current portion

Answer 1

• When a long-term note payable that requires annual installment payments is initially recorded, it is first recorded as a long-term note payable.
• Then, at the same date, a second entry is made to reclassify the current portion
• The statement is True.
• Since long-term note payable is for a longer period, it is first recorded as long-term note payable.
• But, if it requires annual installment payments, then a second entry is made to reclassify long -term note payable to the current portion.

The statement, "When a long-term note payable that requires annual installment payments is initially recorded, it is first recorded as a long-term note payable.  Then, at the same date, a second entry is made to reclassify the current portion" is True.

Answer is True.