Loan from bank

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi

If you get a loan from the bank, in the main ledger is it a debit or a credit?

Thanks

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    I would say:-

    Credit 'Bank Loan' Account (in Main/General)

    Debit Bank column in Cash Book.

    But, What do YOU think?

    Am I right?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Thanks Toadface

    Well I wasn't sure if it would come under liability (because you owe it back) or an expense, then I thought it could be income as its money you have receieved in!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Generally, i would put it under Liability, as loans usually take the long-term to repay. (and it goes on the company's balance sheet).

    Using Pearls - 'Revenue' would be credit...

    I assume you're using DeadClic? (for 'Income') - or is it Diall Cilla? (I don't use them myself - I would forget what letters stood for!!!).

    A question for you to answer -
    What are the entries, when you start to repay it?

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    erm...Debit loan account Credit cash?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Yep!

    Only be careful about your cash & bank columns. I've put stuff the wrong way around...

    Just for interest - which entry did you figure out first?

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    yep, I always do that in my suspense accounts!!

    well I try and think about the bank first , I knew it would be money paid out so it would be a credit, therfore I had to Debit somewhere else!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    That's how I do it - I look for something I recognise (ie out of bank) then the other entry is kind of automatic...

    I also see it as pictures - lots of lines! I don't see it as the 'words'.

    Some people like to do it the words way, but I find it a 'little' confusing...

    It's a case of whatever works for you.

    Anything else that I can try and help you with?

    So, you're using suspense accounts... Have you completed studies and now revising for exam?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    I had my last lesson on Thursday, but I have the revision course in just over a week then I take the exam on December 5th..

    I only found out a few weeks back that I was on a fast track course, (work booked me on it) I just presumed it was going to take about a year and that I would take the exam next june but no! I have done units 1-3 in just 10 lessons and am taking the PLB exam next month!!

    I only started the suspense accounts last week, and thought I was doing really well as I got my suspense account to balance, until I was told that although it balanced, I had everything round the wrong way :-o
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Ouch!

    Are you doing Diploma? (Sorry, read it, but forgot that I'd read it! Doh...)

    Have you tried any exam papers?

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    no the NVQ

    yep, I have done quite a few but normally get stuck when it comes to bits like the bank loans! I am actually printing them out as we speak but my printer is so slow and keeps on jamming :evil:

    so are you taking the PLB exam next month too??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Yep! PLB.

    Have you had a go at the IAC's?

    They are a little more challenging...

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    The actual loan is a liability but the repayments are an expense.

    so credit loan and debit bank as toadface said

    then for repayments credit bank and debit loan
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    no I haven't, i will take a look though

    do you feel confident enough to take the exam yet?

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Yeah. I feel ok about the numbers side, it's those awkward questions that throw me - like name three different systems for filing documents, etc.

    Gem - you seem like someone who is now at Technician - would you ever have the loan and the repayment as separate accounts? so then you would actually have an 'expense' item...
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    I'm doing Intermediate!

    I think you just put the repayments on the debit side of the loan account. With the loan interest you would have a seperate account called loan interest paid, or something similar.

    Are you taking the PLB in december?

    Gem
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    I most certainly am!

    I found you on one of the other threads, so I now know that you are Intermediate...

    I was thinking, that if you had the repayment as expense, then you would have it on Balance sheet, etc. And some loans have tax relief, etc. I can't quite remember, something to do with mortgages...?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Hi Toadface

    Hope you don't mind me butting in. The interest is the only thing you are interested in on a loan as that is the part that goes to the profit and loss (or income statement) and is the only part of the repayment that is allowable for tax (as long as certain conditions are met).

    I think you may have been referring to MIRAS (something to do with the first £30000 of a mortgage and interest relief) but that has been abolished.

    Hope that helps, I have put together a loan account on excel if you want it - just pm me with your address if you want me to send it to you.

    Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Loan from bank

    Thanks, Annette. I'll get my computer sorted for Excel docs, then get back to you. I use Wordperfect (12) for wordproc, but can never get them to email properly. Am gonna try and get MS Office...

    I've been looking ahead at the course units.

    So, we're doing trading and loss account at intermediate, and balance sheets at Technician... Is my understanding correct?

    :shock:

    [Corel Quattro... instead of Excel]

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