Notes Receivable

This video will focus on accounting for notes receivable. Companies may grant credit in exchange for a promissory note, which is a written promise to pay a specified amount of money on demand or at a definite time. The interest rate in a note is an annual amount. The formula for computing interest is: P R T (Principal x Rate X Time period). Where P = principal or face value and R = annual IR and T represents time in terms of 1 year.