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Bookkeeping All-in-One For Dummies, 2nd Edition
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Bookkeeping All-in-One For Dummies, 2nd Edition

by Lita Epstein, John A. Tracy
August 2019
Intermediate to advanced content levelIntermediate to advanced
608 pages
15h 28m
English
For Dummies
Content preview from Bookkeeping All-in-One For Dummies, 2nd Edition

Chapter 2

Paying and Collecting Interest

IN THIS CHAPTER

Bullet Understanding interest calculations

Bullet Making the most of interest income

Bullet Calculating loan interest

Few businesses are able to make major purchases without taking out loans. Whether loans are for vehicles, buildings, or other business needs, businesses must pay interest to whoever loans them the money.

Some businesses loan their own money and receive interest payments as income. In fact, a savings account can be considered to be a type of loan because by placing your money in the account, you’re giving the bank the opportunity to loan that money to others. So the bank pays you for the use of your money by paying interest, which is a type of income for your company.

This chapter reviews different types of loans and discusses how to calculate and record interest expenses for each type. In addition, it talks about how you calculate and record interest income in your business’s books.

Deciphering Types of Interest

Any time you make use of someone else’s money, such as a bank, you have to pay interest for that use, whether you’re buying a house, a car, or some other item. The same is true when someone else is using your money. ...

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Publisher Resources

ISBN: 9781119592907Purchase book