Notes Payable Normal Balance

Notes Payable is a liability that companies incur when they borrow money from a lender, often a bank. The normal balance of Notes Payable is a debit since it represents an accounting entry that increases the amount of liabilities on the balance sheet. To put it simply, when a company issues a note payable to a lender in exchange for cash, the company’s liability is increased and the lender’s asset is increased at the same time. By keeping track of your notes payable balances using this normal balance norm, you’ll be able to stay on top of your company’s financial health.