I watched the lecture on financial liability. I cant really get my head around why B/F was added to finance cost and coupon rate was deduced to get the carried forward. especially why finance cost was added? Please help me out
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Need help understanding this
6y ago#1Hi,
The finance cost is an expense (a debit entry) and so we DR Finance cost CR Financial liability, and therefore add it to the b/f liability balance.
The coupon payment is a cash payment (a credit entry) and so we DR Financial liability CR Bank, and therefore deduct it from the b/f liability balance.
Hope that clears it up for you.
Thanks
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