Q. What do you mean by note?

A note is an unqualified written promise to pay another party the amount owed either when demanded or at a certain specified date habitually with interest a charge made for use of the money at a specified rate. A note receivable become visible on the balance sheet of the company to which the note is given. A note receivable occurs when a company makes a sale and receives a note from the customer when a customer gives a note for an amount due on an account receivable or when a company loans money and receives a note in return. Section 9 discusses notes at length. Other current assets might comprise interest receivable and prepaid expenses. Interest receivable arises when a company has earned however not collected interest by the balance sheet date. Typically the amount isn't due until later. Prepaid expenses comprise insurance, rent and supplies that have been paid for but all the benefits have not yet been realized (or consumed) from these expenses. If prepaid expenses hadn't been paid for in advance they would require the future disbursement of cash. Additionally prepaid expenses are considered assets because they have service potential.