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Simple English definitions for legal terms
note payable
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A quick definition of note payable:
A note payable is a type of debt owed by a company or individual to a creditor. It is also known as an account payable. This means that the creditor has provided goods or services to the debtor, and the debtor must pay them back at a later date. It is important for the debtor to keep track of their note payable and make timely payments to avoid defaulting on the debt.A more thorough explanation:
Definition: A debt owed by an enterprise in the normal course of business dealing, reflecting a balance owed to a creditor. It is often shortened to payable and is also termed account payable.
Example: A company borrows money from a bank and signs a promissory note agreeing to repay the loan with interest. The promissory note is a note payable.
Explanation: The example illustrates a situation where a company owes money to a bank and has agreed to repay it. This debt is recorded as a note payable in the company's financial statements. It is a liability that the company must pay back in the future.