# of note Section Promissory Notes Glencoe

W
Shared by:
Categories
Tags
-
Stats
views:
1
posted:
10/2/2012
language:
English
pages:
9
Document Sample

```							Notes Payable and
Receivable
Making Accounting Relevant
Long-term liabilities are reported on a
company’s balance sheet.

Discuss the types of long-term
liabilities that a company may
show on its balance sheet.
Section 1 Promissory Notes

What You’ll Learn

 How promissory notes are used.

 How to determine the due date,
interest expense, and maturity
value of a promissory note.
Section 1 Promissory Notes (cont'd.)

Why It’s Important

In order to properly record a
promissory note in the accounting
records, you need to read and
interpret the information found on
the note itself.
Section 1 Promissory Notes (cont'd.)

Key Terms
    promissory note
    note payable
    note receivable
    principal
    face value
    term
    issue date
    payee
    interest rate
    maturity date
    maker
    interest
    maturity value
Section 1 Promissory Notes (cont'd.)

A Promise to Pay
 A promissory note is a written promise
to pay a certain amount of money at a
specific time.
 “Promissory note” is often shortened
to “note.”
Section 1 Promissory Notes (cont'd.)

Determining the Maturity Date of
a Note
 When a note is signed, the maker
agrees to repay the note within a
certain period of time, usually
expressed in days or months.
 This period of time is the term of the
note.
 Both the term and the issue date
(date on which the note is signed)
are needed to determine the
maturity date (due date) of a note.
Section 1 Promissory Notes (cont'd.)

Calculating Interest Due on a
Note
 Interest is the fee charged for the use
of money. The interest rate is the
interest stated as a percentage of the
principal.
 The formula used to compute interest
is:

Interest = Principal  Interest Rate  Time
Section 1 Promissory Notes (cont'd.)

Calculating Interest on a Note
(cont'd.)

 If the term of a promissory note is
less than one year, the time in the
calculation is expressed as a
fraction of one year.
Section 1 Promissory Notes (cont'd.)

If the interest rate for a

promissory note is stated on an

annual basis, and if the promissory

note has a term that is less than one

year, how is the interest for the note

calculated?

```
Related docs
Other docs by alicejenny
to view Lesson from Teachers
GUIDELINES FOR POST EXPOSURE PROPHYLAXIS PEP
FIRST BANK ADDITION City of Bloomington