August 2025
Beginner
352 pages
8h 38m
English
Content preview from Bookkeeping For Dummies, 3rd Edition
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Chapter 14
Paying and Collecting Interest
IN THIS CHAPTER
Understanding interest calculations
Making the most of interest income
Calculating loan interest
Few businesses can make major purchases without taking out loans. Whether loans are for vehicles, buildings, or other business needs, businesses must pay interest, a percentage of the amount loaned, to the lender.
Some businesses loan their own money and receive interest payments as income. In fact, a savings account can be considered 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 how to calculate and record interest expenses for each type. In addition, I discuss 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 you want. The same is true when someone else is using your money. ...
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.