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Notes Payable and Accounts Payable are two different things.

Although they are both contained in the Liability Section of a Balance Sheet they result from much different transactions.

Notes Payable are longer term, generally over a year. The over simplified explanation is that they result from someone lending you money. Examples of this type of liability are Promissory Note where you or the business promises to pay at some future date or installments prinicipal plus interest. Common examples would be an installment loan to buy a car or truck or a mortgage. These types of liabilities are also usually secured by something of value as collateral and usually recorded in a county courthouse so that the creditor, the person who loaned you the money, is not out of luck if you experience financial difficulty.

Accounts Payable is shorter term generally within 30 - 60 days and is typically an invoice for something you or the company bought on a credit account with a vendor or supplier. An over simplfied example would be if you were a business and had an account with ABC Janitorial Supplies. If you were Skilletlicker Restaurant and you bought janitorial supplies on credit from ABC Janitorial Supplies you should be expecting to pay for these supplies when you receive them or when they are shipped depending on the shipping terms. When the ABC Janitorial Supplies invoice is received you would debit Janitorial Supplies in the general ledger and credit accounts payable, thus recording the liability. In 15 - 45 days depending on invoice terms, when the check is written to pay for these janitorial supplies you would debit accounts payable, thus eliminating the liability balance and credit cash, thus reducing your available cash balance.

I hope this over simplified explanation helps you better understand the difference between notes payable and accounts payable.

DMyers8985
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