Maturity date
from class:
Financial Accounting I
Definition
The maturity date is the specific date on which the principal amount of a note, draft, acceptance bond, or other debt instrument becomes due and payable. It marks the end of the instrument's term and when final payment must be made.
5 Must Know Facts For Your Next Test
- The maturity date determines when the borrower must repay the principal amount of a note receivable.
- Interest calculations on notes receivable are often based on the time remaining until the maturity date.
- Long-term liabilities like bonds have specified maturity dates that indicate when they need to be repaid in full.
- The pricing of long-term liabilities can be influenced by their proximity to the maturity date.
- Understanding the concept of maturity dates is crucial for accurately accounting for receivables and payables.
Review Questions
- What happens on the maturity date of a note receivable?
- How does the maturity date affect interest calculations for notes receivable?
- Why is knowing the maturity date important for managing long-term liabilities?
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