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

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Originally Posted by paraclete

No, capital costs are accounted for by depreciation

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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

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Originally Posted by paraclete

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

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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?

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Originally Posted by ScottGem

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.

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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.

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Originally Posted by Allen Farber

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.

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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.

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Originally Posted by ScottGem

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.

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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.

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Originally Posted by Allen Farber

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.

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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

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Originally Posted by Alty

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.

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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

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Originally Posted by Alty

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.

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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)