The double entry for receiving a loan debits Cash (asset increases) and credits Notes Payable (liability increases). For loan payments, debit Interest Expense and Notes Payable while crediting Cash. Categorize the interest portion as an operating expense on your.

This can affect key financial ratios such as debt-to-equity ratio and return on assets. Operating leases, on the other hand, have a relatively smaller impact on the balance sheet and may be preferred by companies seeking to maintain a.