Promissory Note Definition

In accounting, a promissory note is a contract between two parties detailing the obligation of one party (the maker) to pay the other party (the payee). Promissory notes are usually exchanged as a form of payment for a good or service. Simple promissory notes specify only an amount-for example a personal check is a simple promissory note. Complex promissory notes may specify additional terms such as principal amounts, interest rates, and maturity dates. A variety of types of promissory notes is currently in use in finance.