Notes payable and Accounts payable are both used to represent the obligations that a company has to an entity. They are however different in certain ways such as:
- Payment period
- Conversion
- Entities owed
The following are differences between notes payable and accounts payable:
- Payment period - Accounts payable are to be paid in less than a year whereas Notes payable can either be less or more than a year.
- Conversion - Accounts Payable can be converted to a notes payable if the company is unable to pay them off in time. A Notes payable on the other hand, cannot be converted to an Accounts payable.
- Entities owed : Accounts payables are owed to suppliers of the company but Notes payable are owed to financial institutions.
In conclusion, notes payables and accounts payables have several differences.
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