Notes Payable (Accounting) - Explained
What are Notes Payable?
Written by Jason Gordon
Updated at April 7th, 2022
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What are Notes Payable?
A note payable is a written promissory note. A promissory note is a legal agreement to pay a stated amount. Notes payable contain an interest rate on the amount of principal.
A note payable may be a a short-term liability on the balance sheet if it is payable within 12 months or a long-term liability if it is payable in more than 12 months.
How to Account for Notes Payable
The following video provides a detailed explanation of how to record a note payable.
Related Topics
- What are Current Liabilities? – Financial Accounting
- How to Record Accounts Payable (Liability Accounts)? – Financial Accounting
- What are Notes Payable? – Financial Accounting
- What are Employee Payroll Liabilities? – Financial Accounting
- Estimated Liabilities (Warranties) – Financial Accounting
- What are Contingent Liabilities? – Financial Accounting
