Course Outline
Join PRO

What is the difference between a note payable and a bond payable?

Harold Averkamp, CPA, MBA

Definition of Note Payable and Bond Payable

For accounting purposes, a note payable and a bond payable have the following similarities:

  • Formal written promises to pay interest and to repay the principal amount or maturity amount on specified future dates
  • Reported as liabilities
  • Interest is accrued as a current liability
  • Principal that is due within one year of the balance sheet date is reported as a current liability (unless there is a bond sinking fund or a formal agreement for refinancing the debt with new long-term debt or stock.)
  • Principal due after one year is reported as a long-term liability

Example of Note Payable and Bond Payable

Assume that a corporation recently borrowed $200,000 in the form of a note payable due in two years with interest of 8% per year paid quarterly. In addition, it recently issued a $2,000,000 6% bond payable due in 10 years with interest paid semiannually. Both the note payable and the bond payable are to be reported as long-term (noncurrent) liabilities on the corporation’s balance sheet. Any interest that has accrued but was not paid as of the balance sheet date is to be reported as a current liability such as Accrued Expenses Payable. On the corporation’s income statements, the interest that occurred (whether paid or not paid) during the period of the income statement will be reported as interest expense.

Join PRO to Track Progress
Must-Watch Video

Advance Your Accounting and Bookkeeping Career

  • Perform better at your job
  • Get hired for a new position
  • Understand your small business
  • Pass your accounting class
Watch the Video

Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials

Read all 2,645 reviews



PRO Plus

Lifetime Access (One-Time Fee)
Word Scrambles
Bookkeeping Video Training
Financial Statements Video Training
Visual Tutorials
Quick Tests
Quick Tests with Coaching
Cheat Sheets
Business Forms
All PDF Files
Progress Tracking
Earn Badges and Points
Certificate - Debits and Credits
Certificate - Adjusting Entries
Certificate - Financial Statements
Certificate - Balance Sheet
Certificate - Income Statement
Certificate - Cash Flow Statement
Certificate - Working Capital
Certificate - Financial Ratios
Certificate - Bank Reconciliation
Certificate - Payroll Accounting

About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on

Learn More About Harold

Certificates of

Certificates of Achievement

We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping:

  • Debits and Credits
  • Adjusting Entries
  • Financial Statements
  • Balance Sheet
  • Income Statement
  • Cash Flow Statement
  • Working Capital and Liquidity
  • Financial Ratios
  • Bank Reconciliation
  • Payroll Accounting
Badges and Points
  • Work towards and earn 30 badges
  • Earn points as you work towards completing our course
View PRO Plus Features
Course Outline
Take the Tour Join Pro Upgrade to Pro Plus