Definition

1. Noun:
   • A written promise to pay a specific sum of money at a specified future date: A "note payable" is a formal, written financial instrument or liability that acknowledges a debt and obligates the issuer (the party who creates the note) to pay the holder a certain amount of money at a definite time or on demand.

Usage

• A "note payable" is used in accounting and finance to record a formal debt obligation. It is a liability on the balance sheet of the entity that owes the money.
• It represents a promise that is more formal than an account payable, often involving a written contract with specific terms like interest rate and maturity date.

Examples

• Noun:
  • The company recorded a new note payable for the loan it received from the bank.
  • The balance sheet shows $50,000 in notes payable due within the next year.

Advanced Usage

• "to issue a note payable": to create and give a promissory note to a lender, formally establishing the debt.
  • The small business had to issue a note payable to secure the necessary funding.
• "to settle a note payable": to pay off the full amount owed on the promissory note.
  • Upon maturity, the company will settle the note payable with cash from operations.

Variants and Related Words

• Promissory Note (n): A synonym for "note payable"; a written and signed promise to pay a stated sum.
  • A promissory note is the legal document that evidences a note payable.
• Note Receivable (n): The counterpart to a note payable; it is an asset representing a written promise that must pay to the holder.
  • While we have a note payable to the bank, we also hold a note receivable from a customer.

Synonyms

• Promissory note: A written promise to pay.
• IOU (Informal): An acknowledgment of debt (less formal than a note payable).

Related Financial Terms

• Account Payable (n): A short-term liability for goods or services purchased on credit, typically less formal and not evidenced by a written promissory note.
  • Unlike a note payable, an account payable usually does not involve a written contract or interest.
• Loan Payable (n): A broader term for money borrowed, which may be evidenced by a note payable.
  • The loan payable was formalized with a signed note payable.

Noun

1. a note promising to pay a certain amount of money at a certain time