Change the principal, rate, and days, and watch interest and maturity value.
$300
$10,300
$100
30 of 90 days
A names a , a who promises to pay, and a who receives it. Interest accrues every day of the , whether or not any cash has changed hands yet.
If the falls after year end, the interest earned so far still belongs on this year's income statement — an adjusting entry, the same idea as any other accrual. If the maker fails to pay, the note is , but the interest earned is still real: the holder records it and moves the whole balance into accounts receivable.