Maturity date

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

1. The maturity date determines when the borrower must repay the principal amount of a note receivable.
2. Interest calculations on notes receivable are often based on the time remaining until the maturity date.
3. Long-term liabilities like bonds have specified maturity dates that indicate when they need to be repaid in full.
4. The pricing of long-term liabilities can be influenced by their proximity to the maturity date.
5. 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?

Related terms

Note Receivable: A financial asset that records a promise from a borrower to pay back a lender at a future date.

Accounts Receivable: 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.