When I make a payment to these debts that I have, does that go into the assets? Isn't the equity I have into the properties assets? Man, I am confused; this really stinks trying to figure this out.
You need a good bookeeping/ accounting class. Try your local community college or the SBA.
Part of your problem, I think is that there are two kinds of accouting statements Operating statements and a Balance Sheet. Your income and expenses are all accounted for in the Operating Statement. The results of operations are then transfered to the Balance sheet.
So when you make a payment that is not an asset or a liabilty-- it is a debit and a credit (assuming your using a double-entry system) You debit your cash account and credit the loan account. Some part of that payment is interest which is an interest expense and is reflected as such on the operating statement. The rest of the payment reduces your principle balance on the loan. Therefore your Liabilities (the amount you owe) are reduced and your Assets (the amount of equity you have) are increased by that amount.
Really, go take a bookeeping class, this stuff is not difficult but it is complicated until you get your head around it. There are lots of cheap bookkeeping classes out there.
Rene,
You need a good bookeeping/ accounting class. Try your local community college or the SBA.
Part of your problem, I think is that there are two kinds of accouting statements Operating statements and a Balance Sheet. Your income and expenses are all accounted for in the Operating Statement. The results of operations are then transfered to the Balance sheet.
So when you make a payment that is not an asset or a liabilty-- it is a debit and a credit (assuming your using a double-entry system) You debit your cash account and credit the loan account. Some part of that payment is interest which is an interest expense and is reflected as such on the operating statement. The rest of the payment reduces your principle balance on the loan. Therefore your Liabilities (the amount you owe) are reduced and your Assets (the amount of equity you have) are increased by that amount.
Really, go take a bookeeping class, this stuff is not difficult but it is complicated until you get your head around it. There are lots of cheap bookkeeping classes out there.