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Making a Note Payable
A Notes Payable is a written record of the terms and conditions of a loan. It may act as the documentation for a loan that you've taken and can help to ensure that everyone is on the same page when it comes to the details of the loan.
While Notes Payable refers to a loan, accounts payable refers to the amount of money that a company owes to its vendors and suppliers for goods and services provided.
Interest payments are usually associated with Notes Payable and are considered to be an expense.
When money is borrowed, the borrower (or their accountant) will post a debit into the cash account and they will simultaneously credit the balance in the Notes Payable account to demonstrate the associated debt.
You can find your Notes Payable in the liabilities section of your balance sheet. Depending on when you plan to pay off the principal balance, it will be labeled as a current or long-term liability.