0
$\begingroup$

I'm new to all this and balance sheets are extremely confusing.

In this example I've received a £25,000 loan from the bank, it has a fixed interest rate of 6% to be paid over 1-5 years.

This is the only cash I have to finance my business at the moment and I don't have any other assets (2000 cash from personal finance)

So what I'm wondering is, in a balance sheet do I include the 25,000 as a Cash asset as well as putting it in the liabilities as I have to pay that back?

If someone could explain this to me or maybe show me what it would look like in a mini balance sheet I would be super grateful!

$\endgroup$

closed as off-topic by Adam Bailey, JoaoBotelho, Giskard, BKay, BB King Jan 9 '18 at 11:24

  • This question does not appear to be about economics, within the scope defined in the help center.
If this question can be reworded to fit the rules in the help center, please edit the question.

0
$\begingroup$

Yes, you are correct: add the 25k both in cash and in liabilities.

The balance sheet represents what you have (assets) and what you owe (liabilities). So when you get the loan you do have 25,000 in cash under assets, but you also owe it and will need to repay it at some point (which appear as 25,000 in bank loans, under liabilities). As you repay it, the value in liabilities decreases. If you need to learn more there are several free online courses, like this one.

$\endgroup$

Not the answer you're looking for? Browse other questions tagged or ask your own question.