Question

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets

B. Long-term investments

C. Plant assets

D. Intangible assets

E. Current liabilities

F. Long-term liabilities

G. Equity

7. Notes payable (due in 3 years)

Short answer

The correct answer is F, long-term liabilities.

Step-by-step solution

Definition of notes payables

Notes payables are the promissory notes issued by the purchaser to promise to pay a fixed sum after a specific period to the seller of the goods.

Reason of choice

The given notes payable is due in three years, so it cannot be shown as the current liability, the notes payable should be shown as the long-term liability in the balance sheet.