Notes Payable: debit or credit?
Notes Payable increases on the credit side and decreases on the debit side: its normal balance is a credit.
Liabilities are amounts the business owes. They increase with a credit.
Name in each convention
Account names and codes follow each convention; an account that does not exist in a convention is not offered there.
| Convention | Account |
|---|---|
| United States (US textbooks) | Notes Payable |
| Spain (PGC 2007) | — |
| France (PCG 2025) | — |
| Germany (generic accounts) | — |
Practice entries that use this account
- Receiving a bank loan
- Repaying the principal of a bank loan
- Paying a loan installment: principal plus interest
- Buying equipment with a down payment and a note payable
- Buying a delivery van with a bank loan
- Giving a supplier a note for an open account
- Paying a note with interest at maturity
- Receiving a bank loan net of an arrangement fee
- Paying a loan installment: splitting interest and principal
- Converting a loan into shares