Notes Receivable definitions Flashcards
Notes Receivable definitions
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Notes Receivable
Formal written promises for amounts to be received, typically including principal, interest rate, and maturity date, and classified as assets. Principal
Original amount of money loaned or owed, upon which interest is calculated and repaid at maturity. Interest Rate
Annual percentage used to determine the cost of borrowing or the return on lending the principal amount. Maturity Date
Specific calendar day when the total principal and accrued interest must be paid in full to the lender. Time Factor
Proportion of a year for which interest is calculated, often expressed as days over 360 or months over 12. Face Value
Stated value of a note, representing the principal amount to be repaid at maturity. Interest Revenue
Income earned by a lender from charging interest on notes receivable over time. Accounts Receivable
Amounts owed by customers from credit sales, typically less formal and non-interest bearing compared to notes receivable. Accrued Interest
Interest that has been earned but not yet received or recorded in cash by the end of a reporting period. Interest Receivable
Asset account representing interest earned but not yet collected on outstanding notes receivable. Adjusting Entry
Accounting record made at period end to recognize earned interest revenue or accrued interest not yet received. Disposal
Process of removing a note receivable from the books upon collection of principal and interest at maturity. Current Asset
Resource expected to be converted to cash or used within one year, including most notes receivable. Journal Entry
Formal accounting record documenting the acquisition, adjustment, or settlement of notes receivable. Annualization
Adjustment of interest calculations to reflect the actual period a note is outstanding, based on a yearly rate.
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