what is the difference between account payable and note payable?

Question

also tell me the difference between account receivable and note receivable? how will we know while making general journal in accounting that where to write account payable or note payable?

Answer 1

Accounts payable is a file or account that contains money that a person or company owes to suppliers, but has not paid yet (a form of debt). When you receive an invoice you add it to the file, and then you remove it when you pay. Thus, the A/P is a form of credit that suppliers offer to their purchasers by allowing them to pay for a product or service after it has already been received.

http://en.wikipedia.org/wiki/Account_Payable



A promissory note, also referred to as a note payable in accounting, is a contract where one party (the maker or issuer) makes an unconditional promise in writing to pay a sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms. They differ from IOUs in that they contain a specific promise to pay, rather than simply acknowledging that a debt exists.

http://en.wikipedia.org/wiki/Note_payable



Accounts receivable (A/R) is one of a series of accounting transactions dealing with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called credit or payment terms.

http://en.wikipedia.org/wiki/Account_Receivable



Notes Receivable represents claims for which formal instruments of credit are issued as evidence of debt, such as a promissory note. The credit instrument normally requires the debtor to pay interest and extends for time periods of 60-90 days or longer.

http://en.wikipedia.org/wiki/Notes_receivable

Answer 2

A note payable is a formal instrument with interest rate, amount due, when due and payable to whom. An account payable is less formal and arises out of the normal course of business.

Answer 3

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Answer 4

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