BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Definition of Notes Payable Since a note payable will require the issuer/borrower to pay interest, the issuing company will have interest expense. Under the accrual method of accounting, the company will also have another liability account entitled Interest Payable.

Detailed explanation-2: -What is an example of notes payable? Purchasing a building, obtaining a company car, or receiving a loan from a bank are all examples of notes payable. Notes payable can be referred to a short-term liability (lt; 1 year) or a long-term liability (1+ year) depending on the loan’s due date.

Detailed explanation-3: -A note payable contains the following information: The amount to be paid. The interest rate applied to the loan. The maturity date.

Detailed explanation-4: -Notes payable accounts are important for management or finance teams in many businesses because they provide funds that allow them to expand or grow their operations. In these agreements, the borrower often pays the amount back with interest within a certain period.