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In double entry accounting, when you receive a loan, you increase liabilities and assets. You don't just increase liabilities.
by MeinBlutIstBlau 5y ago
In double entry accounting, when you receive a loan, you increase liabilities and assets. You don't just increase liabilities.
- deleted 5y ago[deleted]
- FabHK 5y agoWhen you take out a loan, you receive cash. That cash increases your assets, while the loan increases your liabilities (such that your equity does not change - until you have to pay interest.). (Though, notably, for a bank the client deposits are liabilities, and the loans to clients are assets, indeed.)
- MeinBlutIstBlau 5y agoOf which none of what you said contradicts what I said...
- FabHK 5y agoA loan is a liability, not an asset (for a non-bank).