| A | B |
|---|
| Accrual basis of accounting | an accounting method in which revenue is recognized when earned and expenses when incurred. |
| Accrued revenue | revenue earned but not yet received and recorded. |
| Bank discount | the amount of interest deducted in advance when a promissory note is discounted. |
| Conservatism principle | an accounting guideline that states that when reporting the financial position of a business |
| Contingent liability | the liability an endorser has for the payment of a note. |
| Discounted notes receivable | selling a note receivable to a bank rather than holding it until maturity. |
| Discount period | the period of time between the discount date and the maturity date of a note. |
| Dishonored note | a promissory note that the maker fails to pay or renew on the maturity date. |
| Draft | an order by one party (the drawer) to another party (the drawee) to pay a certain sum of money to a third party (the payee). |
| Face value | the amount written on the “face” of a promissory note. |
| Interest | the fee charged for the use of money. |
| Interest-bearing note | a promissory note requiring that payment of the principal plus interest on the maturity date. |
| Interest rate | the amount of interest expressed as a percentage of the principal. |
| Issue date | the date a promissory note is written. |
| Maker | one who issues a promissory note. |
| Maturity date | the due date of a promissory note. |
| Maturity value | principal plus interest; the amount that must be repaid on the maturity date. |
| Negotiable instrument | a financial document that transfers ownership from one person to another. |
| Note receivable | a promissory note accepted by a person or business. |
| Notes receivable past due | a current asset account to record dishonored notes. |
| Payee | one to whom a promissory note is issued. |
| Principal | the amount of money borrowed. |
| Proceeds | the amount of cash actually received when a promissory note is discounted; maturity value minus bank discount. |
| Promissory note | a written promise to pay a certain sum of money on demand or on a specified date; a formal legal document serving as proof of a debt. |
| Protest fee | a fee charged when a discounted note is dishonored. |
| Term | the amount of time between the issue date and the maturity date of a promissory note. |
| Trade acceptance | a special form of draft that arises out of the sale of merchandise and has this fact noted on its face. |
