Why is Principal Repayment not on the Income Statement/P&L Statement? (Accounting Question)

Question

It seems if you only include interest expense and do not include the required payment on the principal, the Income Statement would seem misleading.

In: Other

Answer 1

Principal reduction is the reduction of an asset (cash probably) for the reduction in liability (the debt). It shows up in the balance sheet.

Think about it this way, if you took $1,000 in cash to purchase $1,000 worth of inventory – is there a profit or loss generated in this transaction? If not, it wouldn’t show up in the P&L.