current accounts - pls help

laurad

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?

Esme

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.

laurad

Esme wrote: »

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! lol

Esme

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'

sarahwilson

Is it not money that really the company owes to the partners, therefore its a liability.

visha

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.

laurad

thanks. did simulation today and all balanced so a good start :001_smile:

pamelacooke

dont the partners current accounts go under financed by?

laurad

pamelacooke wrote: »

dont the partners current accounts go under financed by?

yeah