Which type of account would 'notes receivable' be classified under?

'Notes receivable' refers to a written promise for a certain amount of money to be paid at a future date. This financial instrument is classified as an asset because it represents money that is owed to the business and can be collected in the future, contributing positively to the overall value of the company.

When a business has notes receivable, it indicates that it has a legal claim to receive cash or assets from another party, making it part of the company's assets on its balance sheet. This classification helps assess a company's financial position, as assets are crucial for determining liquidity and overall value.

By understanding that notes receivable fall under the category of assets, one can see the importance of tracking these amounts to manage the financial health and cash flow of the business effectively.