120 FARM ACCOUNTING 



cific case to credit " Notes Receivable Discounted** ac- 

 count until the maturity of the note. This is not consid- 

 ered necessary in farm accounting. 



In all cases it should be noted that Notes Receivable 

 account is debited or credited for the face of the note, ex- 

 cept that credits for less than the face may be made if 

 payments are made on the installment plan. Interest on 

 notes is never entered in the Notes Receivable account. 

 Any balance in the Notes Receivable account is a resource. 



Notes Payable. The principles just stated concerning 

 face value and interest of Notes Receivable apply aN 

 Notes Payable, except that the partial payments of the 

 note are debited to the Notes Payable account, instead of 

 being credited. 



Notes Payable account is credited when we give our note 

 to someone else, or when we give out any negotiable in- 

 strument on which we are primarily liable as maker or 

 acceptor. It is debited when the instrument is paid by 

 us or returned to us for some other reason. Any balance 

 in Notes Payable account is a liability. 



Notes Receivable and Payable Distinguished. Both in 

 case of Notes Receivable and Notes Payable accounts a 

 credit entry is made when a negotiable instrument is 

 parted with by the business. For that reason it is diffi- 

 cult for some to determine whether to credit Notes He. , i\ 

 able or Notes Payable in any given case. The test should 

 always be, "Who is primarily liable on the instrument T" 

 If we are primarily liable, credit Notes Payable, thus cre- 

 ating a Liability. If someone else is primarily liable, 

 credit Notes Receivable. Another test is also helpful. 

 Notes Payable account ?> always credited with the face 

 of a note before it is debited: Xotes Receivable is al ?/<?/> 

 debited before it is credited. Notes Payable always has 

 a credit balance if any. Notes Receivable always has a 

 debit balance if 



