Long-Term Notes Payable – Current Liabilities

Long-term notes payable, those that come due in more than one year, are also very common. They differ from bonds mainly in the way the contract with the creditor is structured. A long-term note is a promissory note that represents a loan from a bank or other creditor, whereas a bond is a more complex financial instrument that usually involves debt to many creditors. Analysts often do not distinguish between long-term notes and bonds because they have similar effects on the financial statements.

Firms often borrow money by signing notes payable to banks or other lending institutions. Such notes can either be interest-bearing or discounted notes. This section describes the essential features of both types.

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