| ▲ | LeanOnSheena 2 days ago | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Yes, at the time of the initial transaction the borrower would not have a liability on their balance sheet that included the interest due. Over the course of the borrowing period the borrower would accrue interest expense commensurate with the passage of time that would increase the borrowers total liabilities. The author misunderstands the fundamental accounting definitions of liabilities (and also assets). Liabilities (under US GAAP but same core idea under IFRS) are present obligations. At the initial time of borrowing the borrower does not have a present obligation to pay interest on the liability. Similarly, an asset is a present right, and at the time of initial borrowing the lender is not owed the interest. It's not the worst thing I've read, the author has clearly spent time learning things in good faith. That said, there are lots of indicators the author is not an expert in accounting / finance. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▲ | danielmarkbruce 2 days ago | parent [-] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Most of the really stupid stuff written is written in good faith. It's not an excuse. There are many good books written about the financial system, accounting, etc. Rather than writing just another (incorrect) blog post, why not point to the good sources of information? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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