current accounts - pls help
laurad
Registered Posts: 49 Regular contributor ⭐
am i right in thinking that PARTNERS current accounts work the same way as the statements we get through our letterbox? ie. the opposite to the accounting way, so money in is a CREDIT and money out is a DEBIT?
if so, how does it work with carrying it to the balance sheet? is a credit balance still a credit on the BS but you just add it instead of minus it?
if so, how does it work with carrying it to the balance sheet? is a credit balance still a credit on the BS but you just add it instead of minus it?
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Comments
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Partners current accounts are the same as our accounts, credit is money in and debit is money out, you are right there.
I don't understand what you are trying to ask about the balance sheet.0 -
Partners current accounts are the same as our accounts, credit is money in and debit is money out, you are right there.
I don't understand what you are trying to ask about the balance sheet.
thank you.
normally if you have a bank with a credit balance its a liability on the BS. in this case we may have a credit balance but that is an asset in the case of a partners current account.
so its still a credit on the BS right? and we just add it as an asset instead of subtracting it as a liability?
if that makes any more sense then the first one! lol0 -
I'm pretty sure it would be a liability to the buisness because you are taking money out of the buisness and putting it into the partners current accounts.
The buisness and the partners assets are seperate which is explained in the accounting concept 'buisness entity'0 -
Is it not money that really the company owes to the partners, therefore its a liability.0
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current accounts are the partner's second capital account.
treat the enteries in the current a/c as you would do in a capital a/c both for the the debit and credit entries and Balance Sheet.0 -
thanks. did simulation today and all balanced so a good start :001_smile:0
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dont the partners current accounts go under financed by?0
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pamelacooke wrote: »dont the partners current accounts go under financed by?
yeah0
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