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Note Payable, Promissory Note
Definitions and Meaning Explained

A note payable is a written obligation to pay a debt at or before a specific time.

What is a note payable?

A note payable is a liability of an entity, evidenced by a written promissory note to pay by or on a specific date. Notes payable may include instruments such as bank loans, mortgages, and other agreements to pay, sometimes called debentures.

Where do notes payable appear on the Balance sheet?

Notes payable, of course, are carried under Liabilities on a company's Balance sheet. Notes payable in more than one year are carried under Long term liabilities, except for any portion payable within a year. As long term liabilities, Notes payable help define the company's degree of leverage, and are a component of both the financial structure and the capital structure.

Any portions payable within a year are carried as Current liabilities, and thus contribute only to the company's financial structure (but not capital structure).

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