TIP: When the life of a note is expressed in terms of months, the due date is found by counting the months from the date of issue. A note drawn on the last day of a month matures on the last day of a subsequent month. When the due date is stated in terms of days, it is necessary to count the exact number of days to determine the maturity date. In counting, the day the note was issued is omitted but the due date is included.
TIP: The formula for computing interest on an interest-bearing note is:
TIP: An interest rate is always stated in terms of an annual basis, unless otherwise indicated.
TIP: A note is said to be honored when it is paid in full at its maturity date.
TIP: A dishonored note is a note that is not paid in full at its maturity date.