Dishonored Note
Accounting glossary · Understand, connect, apply
A dishonored note is a promissory note that has not been paid as required at maturity.
Example
A customer fails to pay a $1,000 note plus interest when due. The holder evaluates the outstanding claim and may reclassify it as appropriate.
Remember the difference
Dishonor does not automatically extinguish the legal claim. Assess accrued interest, collectability and the applicable accounting requirements.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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