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What would the entry be for a monthly interest payment on a long term loan?

• Dr: Interest Expense,  Cr: Cash

 

• Dr: Cash,  Cr: Interest Expense

 

• Dr: Long Term Liability,      Cr: Interest Expense

 

• Dr: Interest Expense,  Cr: Long Term Liability

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Question added by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date Posted: 2015/06/08
Upvote (2) Views (10) Followers (5) Answers (4) Report Question
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Shahbaz Hayder
by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Yes Option1 is the right answer.

Vipul Kapadia
by Vipul Kapadia , Asst. Finance Manager , Abu Dhabi National Oil Company

Debit interest expense and credit bank account

Muhammad Fahad Ateeb

Finance Cost Dr. XXXXXX (P/L account) Cash/Payable Cr. XXXXX (Balance sheet under Current asset/Current liability respectively)

Zehab Osman
by Zehab Osman , Accountant , Aldar Consultancy Co.

• Dr: Interest Expense,  Cr: Cash

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