Accounting for Current Liabilities (Notes Payable) - Financial Accounting

Another type of current liability is notes payable. Now we talked about this in chapter 7 with notes receivables

Notes payables are not much different. We're going to follow the same procedures. So if we're looking at this as a short-term notes payable, again, it's a written promise using a promissory note to pay

because this is a payable, a specified amount of money, usually with interest either on demand or at a defined future date

within one year of the company's operating cycle, whichever is longer. So pretty much this is just a debt that we owe from a notes payable that we are planning on paying back or we need to pay back within one year

So your student loans, your mortgages, your car loans, those would not fall into these

We're talking about one year or less loans. In the next video, I'm going to show you how to do this, but it's very similar to the way we did it with notes receivables