Question

What do short-term notes payable represent?

Short answer

It is a written promise that needs to pay. It hasseveral essential features, including afixed date for payback, aclear payable sum,interest rates, andthe potential for debt sale to a third party.

Step-by-step solution

Meaning of Short-term Notes Payable

A short-term note payable is a current liability and a written obligation to discharge the principal amount and the interest amount within a year.

Examples

When a company has a debt with a lender, it can produce short-term notes payable. The short-term notes represent all the necessary dates like the date of issue, the amount to be paid, the payment date, and the interest rate.

Account payable and wages payable are typical examples of short-term debt.