So I'm trying to figure out total costs and I'm wondering, are loan payments (including principal) a cost? I know it's not considered an expense (except the interest), but it is it considered a cost?

No, capital costs are accounted for by depreciation

No, capital costs are accounted for by depreciation

I didn't ask if capital costs were a cost. I asked if loan payments were a cost.

By your own definition loan repayment contains a large capital component and an expense component. The term cost relates to the cost model you adopt, direct cost, absorption cost. Loan repayments would generally. Be considered a financing cash flow. Consider the concept of EBIT

If I got a mortgage loan from the bank for $70,000.00. Where does that go on the income statement? Would it be on the top line because it's positive cash flow along with revenue and interest income? Keep in mind, I'm not asking about the principal part of loan payments. I already know that they aren't an expense. I'm talking about the loan that goes towards me.

Your ideas of accounting are so far off as to lead me to think of you as a child. Income and cash flow are two different concepts. An income statement is otherwise known as a profit and loss statement and it measures the result of business activity. There is another statement called the cash flow statement which lays out the cash flows. The two measure different outcomes. There is also a statement of financial position, a balance sheet, and assets and liabilities are shown there. Get a copy of Accounting for Dummies or enroll yourself in an accounting course so you can distinguish between capital transactions and revenue transactions

Your ideas of accounting are so far off as to lead me to think of you as a child. Income and cash flow are two different concepts. An income statement is otherwise known as a profit and loss statement and it measures the result of business activity. There is another statement called the cash flow statement which lays out the cash flows. The two measure different outcomes. There is also a statement of financial position, a balance sheet, and assets and liabilities are shown there. Get a copy of Accounting for Dummies or enroll yourself in an accounting course so you can distinguish between capital transactions and revenue transactions

I actually have the accounting for dummies book and it didn't do anything for me. It just gave me more questions. And the book clearly isn't meant for dummies because no dummy would understand all the accounting terms they drop in the beginning without any explanation or definition.

You telling me the book doesn't have a glossary of terms or definitions within the text? You are obviously internet savvy, Google it. You cannot condense years of study in a few minutes answering questions

The Dummies series have a very good reputation. But even they assume there is some level of knowledge so the reader can understand the terms. As para said, terms can be looked up. If they aren't defined in the book, then look them up.

But I have to agree with para that your questions are not what a grown man running a business would ask. The only accounting background I have is what I've picked up over 30 years of developing databases for people, many in the Accounting field. And I seem to know a lot more than you do.

Thanks Scott

How would you record a loan on the income statement? Furthermore, how would I record it if I spent some of it on the business. For example, if I got a loan for $1,000.00 and I spent $200.00 of the loan on materials, how would I record that?

The Dummies series have a very good reputation. But even they assume there is some level of knowledge so the reader can understand the terms. As para said, terms can be looked up. If they aren't defined in the book, then look them up.

But I have to agree with para that your questions are not what a grown man running a business would ask. The only accounting background I have is what I've picked up over 30 years of developing databases for people, many in the Accounting field. And I seem to know a lot more than you do.

I am not running a business. I'm taking a college course on accounting and I just failed the exam so I need to redo it.

Requesting this be merged with your other thread on this topic.

I am not running a business. I'm taking a college course on accounting and I just failed the exam so I need to redo it.

Well that should have been mentioned up front. You have been posting under a false pretense that these questions were for an existing business. We have a strict policy about homework questions here. We do not do the work for you, but will critique your answers.

Frankly, I'm not surprised you failed the exam.

Well that should have been mentioned up front. You have been posting under a false pretense that these questions were for an existing business. We have a strict policy about homework questions here. We do not do the work for you, but will critique your answers.

Frankly, I'm not surprised you failed the exam.

Sorry, I was just using a business as an example.

Every legitimate answer you were given, and all were legitimate and answered the question you asked, you fought about and tried to discredit, even though it's obvious you don't know a thing about accounting. I'm really not surprised you failed the exam. I'm more surprised that you failed and still seem to think that you know more than experts, people who didn't fail, that answered your question.

You don't seem to be willing to learn, or you simply can't wrap your brain around what you're learning, and worse, you're not willing to listen to others that actually know what they're talking about and accept that you don't know enough to usurp them. In other words, you know nothing, and are unwilling to learn anything from those that do know what you don't, which is a recipe for failure.

If you fail and ask people for help, you have to be willing to accept that help and learn from it. You're not able or willing to do that based on this thread. Also, in accounting, when you have questions, you have to be specific, and you weren't.

In my opinion, accounting really isn't for you.

Oh, and before you try to discredit me along with everyone else, I actually went to college for accounting, and I hated it, even though I passed every test and did very well with it, I hated it, so I changed my major. My lowest grade in accounting was 97%. But I can't stand it, even though I understood it very well.

You are the opposite of me, it seems. You want to do it, but you're not good at it based on what you wrote and the replies you gave. You really should think about dropping accounting and focusing on something else. That's just my opinion.

I am not running a business. I'm taking a college course on accounting and I just failed the exam so I need to redo it.

If you had told me that in the first place and posted your questions and answers we could have told you where you went wrong. Undoubtedly you have tutiors at that college so ask them to sort you out

Every legitimate answer you were given, and all were legitimate and answered the question you asked, you fought about and tried to discredit, even though it's obvious you don't know a thing about accounting. I'm really not surprised you failed the exam. I'm more surprised that you failed and still seem to think that you know more than experts, people who didn't fail, that answered your question.

You don't seem to be willing to learn, or you simply can't wrap your brain around what you're learning, and worse, you're not willing to listen to others that actually know what they're talking about and accept that you don't know enough to usurp them. In other words, you know nothing, and are unwilling to learn anything from those that do know what you don't, which is a recipe for failure.

If you fail and ask people for help, you have to be willing to accept that help and learn from it. You're not able or willing to do that based on this thread. Also, in accounting, when you have questions, you have to be specific, and you weren't.

In my opinion, accounting really isn't for you.

I don't think I'm better than an actual accountant. That's why I'm asking lol If I thought I was better and could pass accounting classes all by myself, you wouldn't find me on here. All I do is question some of the answers if they're confusing. For instance, I asked if the principal portion of a loan repayment was a cost, and the answer I was given had nothing to do with loan costs, but instead capital costs and depreciation. So of course, I questioned it. Unless for some reason, capital cost (which is money spent on land, buildings, and other long term assets) are the same thing as loan payments

Oh, and before you try to discredit me along with everyone else, I actually went to college for accounting, and I hated it, even though I passed every test and did very well with it, I hated it, so I changed my major. My lowest grade in accounting was 97%. But I can't stand it, even though I understood it very well.

You are the opposite of me, it seems. You want to do it, but you're not good at it based on what you wrote and the replies you gave. You really should think about dropping accounting and focusing on something else. That's just my opinion.

I have tried other things, but just can't do anything. I can't do theater because I suck at acting, I can't do science or math because that's way out of my mental league, I can't do art or music because I just don't have those skills, and I can't do sports because I'm extremely nonathletic. Looks like I'll just be living under a bridge when I get kicked out of college (because honestly, there's no way I'm passing)

I have tried other things, but just can't do anything. I can't do theater because I suck at acting, I can't do science or math because that's way out of my mental league, I can't do art or music because I just don't have those skills, and I can't do sports because I'm extremely nonathletic. Looks like I'll just be living under a bridge when I get kicked out of college (because honestly, there's no way I'm passing)

You have to realise that despite it's bad press Accounting is science, it is a social science, and the second oldest profession, it isn't a retreat for those who can't get it together in other endeavours. To study accounting you have to apply yourself to think about things in a different way, your everyday understandings just don't apply in most instances. You have to convert social interactions into financial terms and classify these transactions in diverse ways

One other point about Accounting. There are standards and rules that are governed by international standards organizations. These rules ensure that financial reporting is consistent and that audits can be done. So Accountants need to learn those standards and rules.

You have to realise that despite it's bad press Accounting is science, it is a social science, and the second oldest profession, it isn't a retreat for those who can't get it together in other endeavours. To study accounting you have to apply yourself to think about things in a different way, your everyday understandings just don't apply in most instances. You have to convert social interactions into financial terms and classify these transactions in diverse ways

I am aware, that's why I'm desperately trying to make this concept not as elusive for me as it is now. I really do want to understand it but just can't really grasp it. It isn't really so much I chose it as a retreat. It's just that if I don't do accounting, there's really nowhere else to turn to.

One of the first things you have to understand is that you are seeing things from a different perspective. A set of accounts doesn't just record transactions, it classifies them according to certain legal intrepretations. This is why a study of accounting also embraces a study of commercial, corporations and taxation law.
You cannot drop into the middle of an accounting course from a great height as it were, the training of accountants once included the working through a copious number of exercises from the simplist structures and arrangements to the most complex embracing multiple related corporations. College or university accounting courses give you the bare bones and expect you will search out the detail for yourself

Get off the internet and get a tutor. Or use it to get some online tutorials.

https://www.youtube.com/watch?v=o07uKDMx4fw

When looking for a vocation or career, then start with what you like, have interests in, or have a skill that can be developed. What year are you in this "college"? What kind of math background do you have?

You really should be talking to your instructor, or the academic adviser at the school you are at, to at least find out WHY you flunked this exam, or get a much better approach to this class. If there is nothing left but accounting, then you should try vocational training, or get into a trade apprenticeship for a way to be gainfully employed later in life.

Obviously you are stuck in the terminology of accounting and your lousy study habits are just as obvious. You want easy, flip burgers, stock shelves or sell clothes. No degrees necessary and you will not have to live under a bridge, plus its HONEST (hard) work if not glamorous.

What kind of experience do you have from high school? I know, not what you asked, but like the others from the way you have framed your questions and responses you are definitely LOST!

Try a tutor!!

Get off the internet and get a tutor. Or use it to get some online tutorials.

https://www.youtube.com/watch?v=o07uKDMx4fw

When looking for a vocation or career, then start with what you like, have interests in, or have a skill that can be developed. What year are you in this "college"? What kind of math background do you have?

You really should be talking to your instructor, or the academic adviser at the school you are at, to at least find out WHY you flunked this exam, or get a much better approach to this class. If there is nothing left but accounting, then you should try vocational training, or get into a trade apprenticeship for a way to be gainfully employed later in life.

Obviously you are stuck in the terminology of accounting and your lousy study habits are just as obvious. You want easy, flip burgers, stock shelves or sell clothes. No degrees necessary and you will not have to live under a bridge, plus its HONEST (hard) work if not glamorous.

What kind of experience do you have from high school? I know, not what you asked, but like the others from the way you have framed your questions and responses you are definitely LOST!

Try a tutor!!

I've tried a tutor, that's actually one of the first things I did. He couldn't even help me! He said I was "Unteachable". Don't know whether it's funny or sad, but he said I had "Too Many Questions".

Try another one! What other choice do you have?

I've tried a tutor, that's actually one of the first things I did. He couldn't even help me! He said I was "Unteachable". Don't know whether it's funny or sad, but he said I had "Too Many Questions".

There's no such thing as too many questions, but, when you're in college, if you're asking basic questions you should know the answer to, that someone in high school would know the answer to, than yes, you may not be able to learn accounting, and that tutor may well be right. You have to at least have a very basic knowledge of math, and accounting, before you take accounting in college. What year of college are you in?

I find it very hard to believe that accounting is the only thing that you have left, especially since you don't seem to be good at it, according to what you wrote. Not trying to discourage you, but I do have to ask, do you even like accounting? Most people like things that they're good at, things that come easy to them, things they can excel at. You don't seem to even understand the basics, and it won't get easier, it will only get harder, so why did you choose accounting?

What interests do you have? Is there anything you're good at? There has to be something. I think you're trying to get some pity by saying that accounting is the only option you have left. I highly doubt you've explored every option available. If accounting is this difficult for you, and all you have are questions, and you word them the way you worded this one, which doesn't elicit the answers you need, then I would really reconsider accounting as a career.

Looking at all the things you don't want to do because of your admitted short come makes me wonderwhy you don't consider a trade. On second thought maybe you could run for political office!!

I'm a firm believe in people should have an aptitude for the trade they wish to work in. You can only be taught so much, you have to be able to fill in the gaps and learn any new stuff on your own.

Not everyone is cut out for everything. Example...I'm not cut out for writing programming code.

Yes I can do it, yes I did learn how to do some of it...but it doesn't come naturally to me and have to work way too hard to do it.

But I can easily troubleshoot and fix a faulty machine from Mainframes down to the smallest PC.

I've tried a tutor, that's actually one of the first things I did. He couldn't even help me! He said I was "Unteachable". Don't know whether it's funny or sad, but he said I had "Too Many Questions".

I have just corresponded with you a few times and I formed a similar opinion, what it takes is a step by step approach whereas you seem to have arrived somewhere in the middle. Accounting requires great dilligence and acceptance of the rules which have been laid down over centuries and which are known to work. Where you become creative is what you do with the information you have. The why is it so approach doesn't fit because the answer is often this is how it is, get used to it, get over it and move on. If you want to study accounting you have to start at the beginning, there are two classes of transactions a debit and a credit and the credit column is always the one closest to the window