Where to Include Loan on Annual Income Statement

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When preparing an annual income statement, it is important to factor in any loans that may have been taken out for that year. Short-term loans, such as working capital lines of credit, need to be reported in the current liabilities section, whereas long-term loans should be reported in the long-term liabilities section. Any payments made toward the loan, such as the principal or any interest, should be noted in the expenses section, with the net amount being reported as the company’s loan balance. It is essential to properly report all loans on the income statement in order to ensure accuracy and compliance with accounting regulations.