The official business definition of Notes Payable is a liability that a company incurs when it borrows money from another party. It is usually a written promise to pay a certain amount of money at a specified time in the future. Notes Payable is usually a short-term debt, meaning that the company will have to pay the amount back within a year or less. In terms of accounting, Notes Payable is a credit entry in the company’s balance sheet. This means that the company has a liability to pay the amount back to the lender, and the amount is recorded as a credit in the company’s accounts. The credit entry is then offset by a corresponding debit entry in the company’s cash account. In summary, Notes Payable is a credit entry in the company’s balance sheet, as it is a liability to the company.
