Notes payable are loans due to banks or other creditors. A “note” is a legal contract; it represents an obligation to repay a debt. A note payable may be either current or non-current or a combination of both. “Notes Payable” are often individually listed on the balance sheet, and the amounts represent outstanding principal balances only.
Most notes payable consist of long-term loans (or mortgages) that are repaid in installments. These notes are listed as non-current liabilities on the balance sheet. However, the sum of principal payments due in the upcoming year are subtracted and listed separately as current liabilities called, “Current Portion of Long-Term Debt” or “Current Maturities of Long-Term Debt”
If a note payable, such as a revolving line of credit or a loan coming due, expires or balloons within the year, then the entire balance is listed as a current liability.