Expected interest payments on BS
Hi all, recently started studying accounting and confused about debt and interest payments.
If I borrow short term 100k, it shows up as a liability + cash increase. As we pay this off, the liability decreases and we incur expenses on the IS.
Am I misunderstanding here or does this not account for the expected interest payment? What I mean is, maybe you borrowed from a loanshark charging you 250% interest. So the BS won't tell you this right? So if you're unsuspecting and assume a normal 5% interest let's say, then you could really misunderstand the company's future financial situation?
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