In accounting, Notes Payable is a general ledger account in which a company records the face amounts of the promissory notes that it has issued. The amounts for the promissory notes (or simply notes) that have not been repaid are reported as part of the company's liabilities. The amounts are often reported on the balance sheet as long-term debt and/or short-term debt.
Generally, the balance in the Notes Payable account will be reported on the balance sheet as follows:
- the amount due within one year of the balance sheet date will be a current liability, and
- the amount not due within one year of the balance sheet date will be a noncurrent liability.
The company should also disclose pertinent information for the amounts owed on the notes. This will include the interest rates, maturity dates, collateral pledged, limitations imposed by the creditor, etc.