What expense category are loan payments?
Audrey Carroll, Senior Manager, Accounting, RampSee how Ramp automates accounting for 25k+ businesses
There is no definitive answer to this question as it will depend on the specific loan and the purpose for which it was taken out. However, there are a few general categories of expenses that loan payments could fall into, which we will outline below.
Operating Expenses
One possibility is that loan payments could be classified as operating expenses. This would be the case if the loan was used to finance day-to-day business operations, such as purchasing inventory or equipment.
Capital Expenditures
Another possibility is that loan payments could be classified as capital expenditures. This would be the case if the loan was used to finance a long-term asset, such as real estate or machinery.
Debt Service
A third possibility is that loan payments could be classified as debt service. This would be the case if the loan was used to finance the business's existing debt obligations.
Other
Finally, there are a number of other possible expense categories that loan payments could fall into, depending on the specific loan and the purpose for which it was taken out. For example, loan payments could be classified as research and development expenses, if the loan was used to finance research and development activities.
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SVP Finance & Strategy, Barry's
The information provided in this article does not constitute legal or financial advice and is for general informational purposes only. Please check with an attorney or financial advisor to obtain advice with respect to the content of this article.
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