You recently began working for a local public accounting firm and a manager has asked

you to review a client$$s statement of cash flows to determine if items have been properly

categorized as operating, investing, or financing activities. Having just passed the CPA

exam you are feeling pretty confident as you review the statement but are miffed by the

fact that notes payable amounts are included in operating activities as well as financing

activities. Upon further investigation you determine that in addition to making principal

curtailments on a long$-$term note payable to the bank, the client is making principal

payments on a short$-$term note payable to its primary merchandise supplier. You ask

your manager, Reign Monarch if the accounting treatment is different, and she asks you

to research the matter using the FASB Accounting Standards Codification and to

provide your results to her in a brief memo.

You are asked to address the following items in your memo:

$1.$ Use the FASB Accounting Standards Codification to determine the nine$-$digit

Codification citation $($xxx$-$xx$-$xx$-$xx$)$ that specifies the classification of notes

payable to suppliers? What is the specific codification that specifies the

classification of principal payments to creditors who have extended long$-$term

credit?

$2.$ How should the principal curtailments on note payable to the supplier be

classified? How should the principal curtailments on note payable to the bank be

classified?

$3.$ Is accounting the same for both short$-$term and long$-$term notes payable to

suppliers? If not, how do they differ