Notes Receivable and Notes Payable (Financial Accounting Review with Examples)
This video details the difference between a note receivable and a note payable. Watch this Video Next ➡️ • Balance Sheet Accounting - Understand the ...
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Supporting Details
✅ What is a promissory note?
A promissory note is a legal financial document in which one party (the issuer or maker) promises in writing to pay a specific sum of money to another party (the payee) either on demand or at a future specified date. It is essentially a formal, written promise to pay a debt.
✅ Notes Receivable
A note receivable is a financial asset that represents a written promise from a debtor to pay a specified amount of money to the creditor at a future date. In accounting, notes receivable are classified as current assets if they are due within one year or as non-current assets if they are due after more than one year. They are recorded on the balance sheet at their face value, which may be adjusted for any uncollectible amounts or discounts.
✅ Notes Payable
A note payable is a written promise to pay a certain amount of money at a future date. It is a liability for the borrower and an asset for the lender. Notes payable can be short-term or long-term, depending on the repayment period. In accounting, notes payable are recorded on the balance sheet as a either a current or noncurrent liability.
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Disclosure Disclaimer: The information in this video is provided for general education purposes only and may not reflect changes in federal or state laws. This video is not intended to provide advice. Please consult with a professional advisor about your facts and circumstances.
Chapters
0:29 Promissory Note Explained
2:22 Notes Receivable
11:56 Notes Payable