Notes Payable
Written promises to pay specific amounts on specified dates, which may be short-term or long-term debt instruments often used for business financing.
Notes Payable
Written promises to pay specified amounts on specified dates, which may be short-term or long-term depending on the due date.
For example, a company might issue a $100,000 note payable to a supplier, agreeing to pay the principal plus 6% interest in 180 days, or it might have a $500,000 note payable to a bank due in 5 years with quarterly interest payments.
Notes payable formalize borrowing arrangements with specific terms, interest rates, and repayment schedules. They differ from accounts payable by having formal repayment terms and usually bearing interest. Classification as current or long-term depends on the due date, with amounts due within one year appearing as current liabilities.