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
Related terms
Note Receivable: A financial asset that records a promise from a borrower to pay back a lender at a future date.
Amounts owed by customers to a company for goods or services sold on credit.
Bond Pricing: The valuation process of determining what an investor is willing to pay for a bond, considering factors like interest rates and time until maturity.