Profit and Loss.
Balance Sheet exhibits the financial soundness of the comopany as a whole . It gives alomost complete picture to any party interested any type of relation with the company. It gives a birds eys view of assets and liabilities that company possess and Profit / Loss that company has incurred or is projected. For taking any financial decision ( Loan diisbursement , IPO investement etc.) there are some basic ratios to be calculated , balance sheet can be the base of such ratios.
At the end of accounting year, an enterprise is required to prepare financials (i.e. Cash Flow Statement, Profit and loss account and Balance Sheet).Provisions are to be made for certain liabilities like sales tax, Interest on loan etc. (Those which are ascertainable today, while closing a year) but need to pay in near future (next accounting year). These accounting expenses needs to be considered while making provisions and that's why provisions are made. Provisions are made at the time closing a particular year because expenses relating to coming (next) accounting year can't be booked as expense in current books. This is why provisions are made at end of every accounting year.
Current portion of long term loan is classified as current liability and shown under current liability section of balance sheet.
If loan is payable within twelve month of issuance of loan then it is current liability but if it is payable in more than one fiscal year then it is long term liability but even in long term loan, that portion of loan which is payable in current fiscal year is current liability and remaining portion is long term liability.
Capitalization occurs when your lender or loan servicer adds the amount of unpaid, accrued interest on your student loan to your loan balance. Once this interest has been capitalized, interest begins to accrue on that new, higher loan balance.
Loan is on balance sheet
loan loss reserve: loans are going to default so banks use part of provision to book reserve. loan loss provisions: percertage of gross loans that all banks have to keep in their balance sheet as regulated
Loan account is the most important account in the bank's Balance sheet.
The lender is "carrying" the loan on its Balance Sheet
yes
It is posted in long term loan and adv.
Cash is added as asset and amount of loan is recored as a liability.
Debit cash / bankCredit unsecured loan
INTEREST ON LOAN NEVER GOES TO THE BALANCE SHEET AS IT IS A REVENUE EXPENDITURE. IT WILL SHOWN AS AN EXPENSE FOR THE FINANCIAL YEAR AND DEBITED IN PROFIT AND LOSS ACCOUNT BEFORE ARRIVING AT NET PROFIT. MOHAMMED ASIF MUSCAT Mohammed, You are an idiot. Yes it does as interest payable. How do you pay for it? Obviously with cash. It therefore flows through the balance sheet. What state are you from so I can have them take away your cpa license. Chances are you don't have one. Joe Bob Interest paid on a loan does not go directly on the balance sheet as correctly stated by Muscat and instead is seen as a line item on the profit and loss statement. Indirectly however, paid interest is a reduction of cash (cr entry) and owners' equity (dr entry) which obviously effects the balance sheet. Unpaid accrued interest can however be seen on the balance sheet as a short-term liability. Accrued interest in the case of a term note represents interest unpaid from the last note payment to the ending date of the balance sheet. For example, if the last note payment was on 12/20/y0, the balance sheet would show 11/31th of the interest associated with the 01/20/y1 note payment in accrued interest. So... be nice; both of your answers have a component that correctly answers the question. Regards, MJG
loans payable apear under liability on the balance sheet.
Loan repayment will reduce the amount of loan liability from liability side of balance sheet as well as reduce the cash or bank account as the payment is made through bank or cash. General entry is as follows [Debit] Long-term loan xxxx [Credit] cash / bank xxxx
I think it would go under your liabilites..