What Is Notes Payable?
The borrower that issues a promissory note has to record the amount of money received or owed in his accounting books as notes payable. The notes payable account is, therefore, an account on the borrower’s balance sheet that reflects the money owed from an issued promissory note. The lender, on the other hand, that receives the promissory note would record the amount as notes receivable in his accounting book, which is an asset to the lender. Initially, Anne’s Online Store recorded the transaction as accounts payable. So...