Saturday, July 9, 2011

Where does a mortgage go in a trading acc?

For the principal portion of the mortgage, debit cash, "credit" (reduce) loans payable. The interest portion is expensed on the income statement and "hits" the balance sheet in retained earnings. In the Cash Flow statement, for US GAAP, interest is an operating expense (outlfow), principal repayment is a financing cash outflow.

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