Filter by Categories
Accounting
Banking

Accounting




Interest


In a certain context, it refers to the cost of money borrowed from a lender in a direct (by means of loans) or indirect way (by means of debt). Differently stated, interest is an amount charged by a lender to a borrower against the latter’s use of the loaned funds. It is usually expressed as a percentage of the principal amount borrowed, and can be either simple or compound. For a lending entity, interest is a revenue item (it adds to the entity’s assets), while for a borrowing entity, it is an expense (it results in a decrease in its assets).

In a completely different context, interest refers to the equity ownership of a person (legal or  natural) in an entity or specific assets of an entity, expressed in absolute monetary terms or as a percentage. For example, an investing entity may own 20,000 shares of an investee entity (with a base of 100,000 shares outstanding), in which case the investing entity has an equity interest or ownership interest of 20% (in the investee).



ABC
Accounting is the language of business, everywhere, worldwide. It is the means by which virtually every business communicates information about its operations, irrespective of size, scale, objectives, ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*