Stocks/Bonds video question

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Anne Miles

27. Juni 2019 23:29

Hello,
I’m not sure if I’m posting in the correct location, but as i was watching the stocks and bonds video, I had a question:
If liabilities are day, a loan from a bank with interest, and the liabilities are listed as $6million, aren’t the liabilities really greater than $6million if you include the amount of interest you have to pay on top of your principal amount? Is this something that is considered in the balance sheet?

Thank you

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von luger

8. Juli 2019 00:36
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In terms of when you're accounting for the added interest, you would record the interest as an Interest Expense on the Income Statement, rather than the Balance Sheet. However, if you had interest owing, then there is usually an account known as Interest Payable that is included as a liability on the Balance Sheet.

Note that the interest due would be treated as an expense, and placed in the Income Statement. Hope that helps! Let me know if I can help you with anything else.

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Stocks/Bonds video question

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