STRATEGY of WEALTH
(c) Copyright 2012. All rights reserved. www.StrategyOfWealth.com
Wealth Resources:
Connect With Us On:
The Wheel Of Wealth:
Wealth Events:
Subscribe:
Referral Rewards:
What are Notes?
A note payable is a written promissory note, in which a borrower borrows a specific amount of money from a lender, and promises to pay it back with interest over a predetermined time period. The interest rate may be fixed over the life of the note, or vary in conjunction with the interest rate charged by the lender to its best customers (known as the prime rate). This differs from an account payable, where there is no promissory note, nor is there an interest rate to be paid (though a penalty may be assessed if payment is made after a designated due date).
A note payable is classified in the balance sheet as a short-term liability if it is due within the next 12 months, or as a long-term liability if it is due at a later date.
When a company borrows money under a note payable, it debits a cash account for the amount of cash received, and credits a notes payable account to record the liability.
A note payable is a written promissory note, in which a borrower borrows a specific amount of money from a lender, and promises to pay it back with interest over a predetermined time period. The interest rate may be fixed over the life of the note, or vary in conjunction with the interest rate charged by the lender to its best customers (known as the prime rate). This differs from an account payable, where there is no promissory note, nor is there an interest rate to be paid (though a penalty may be assessed if payment is made after a designated due date).
A note payable is classified in the balance sheet as a short-term liability if it is due within the next 12 months, or as a long-term liability if it is due at a later date.
When a company borrows money under a note payable, it debits a cash account for the amount of cash received, and credits a notes payable account to record the liability.