Notes receivable represents claims for which formal instruments of

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

are issued as evidence of

debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...

, such as a promissory note. The credit instrument normally requires the debtor to pay

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...

and extends for time periods of 30 days or longer. Notes receivable are considered current assets if they are to be paid within one year, and non-current if they are expected to be paid after one year.

References

Legal documents {{finance-stub