Legal Definitions - note payable

Definition: A debt owed by an enterprise in the normal course of business dealing, reflecting a balance owed to a creditor. It is often shortened to payable and is also termed account payable.

Example: A company borrows money from a bank and signs a promissory note agreeing to repay the loan with interest. The promissory note is a note payable.

Explanation: The example illustrates a situation where a company owes money to a bank and has agreed to repay it. This debt is recorded as a note payable in the company's financial statements. It is a liability that the company must pay back in the future.