Accounting › Section H · Accounting for receivables › Topic H.6
Notes receivable
When a customer needs longer to pay, or a large sale calls for a formal agreement, a business may accept a signed promissory note instead of an open account. The note earns interest, and that interest must be recognised in the periods in which it is earned.
In this topic
- From an open account to a signed promise
- The vocabulary of a note
- Computing interest and the day-count rule
- Worked example: accepting a note
- Worked example: year-end accrual and collection
- When the maker does not pay
- After a dishonour
- Common mistakes to avoid
- Key takeaways
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