Question

What effect will each bearing note have on the financial statement ?

Answer 1

Meaning of Bearing Note: this is a short term borrowing of the organization and on which the organzation pay the interest as per the agreed terms.

So bearing note carrying always interest these interest are the charged on revenue income of the organization and will shown as expenses. So first effect is on the revenue statement as interest on note expenses and it will be allowed for tax deduction also.

Notes are always a current laiblities becuase the notes are normally payable within a year. So in the balance sheet it will be shown under the heading of current of liabilities.

So the effect of the braring note will be on the both of financial statements that is on the revenue statement and balance sheet.