Please let me know the Definition of "Notes Payable" and "Accounts Payable". What is the Difference between them?
What are the items that can be included in the Notes Payable Account and What items can be included in Accounts Payable A/c? Specifically please mention where a Post Dated Cheque will be posted? Credited Notes Payable Account or Credited to the Bank Account?
Consider this example:
ABC & Company Purchased goods from XYZ Company on 1st January 2010
While making payment ABC Company issued Cheques on 1st January 2010 but the Date on the Cheque is mentioned as 25th February 2010.
What should be the Journal Entry for this transaction?
Should the Bank Account Credited immediately when the Cheque delivered to XYZ Company i.e. on 1st January 2010? The Cheque keeps on appearing in the Bank Reconciliation Statement as Cheques issued but not presented for payment!
Or
We can Credit it to Notes Payable Account and upon Presentation of the in Bank,
Debit Notes Payable Account
Credit Bank Account
Hope I was able to explain my thoughts clearly, if you have any question or need any further clarification, please let me know.
Thanks
CAclubindia
