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Long-Term Notes Payable in Financial Accounting

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.

• Interest-Bearing Notes
• Discounted Notes

Noncurrent Liabilities Topics

Long-Term Notes Payable

Bonds Payable (Long-Term Bonds Payable)

• Issuance of Bonds at Par
• Sale or Issuance of Bonds at a Discount
• Sale or Issuance of Bonds at a Premium
• Early Retirement of Bonds
• Aspects of Borrowing Agreements

Financial Reporting for Income Taxes

• Book and Tax Differences
• Aspects of Income Tax Reporting
• Deferred Taxes and the Liability Concept