'Loan Receivable' T Account

RecovR_Massage

Hi Everyone,

Will the 'Loan receivable' T Account have a DR or CR balance transferred to the trial balance?

I was thinking that it should be transferred to the trial balance as a CR because it is a liability but on the 'AAT L3 ACPR Sample Test 1', they say it is a DR.

Please could anyone help?

Thank you in advance!

Zoynal98

Hi,

As it is a 'receivable' it will usually tend to mean that it is an asset as you are receiving it therefore it will have a debit balance. I.e. you have lent money to someone.

The opposite of Loan receivable is Loan payable which is a liability which will have a credit balance; you have a taken out a loan and are expected to pay back the principle amount including any interest associated with the loan.

Hope this helps.

RecovR_Massage

Thanks Zoynal98,

I interpreted it wrong. I thought 'Loan Receivable' meant that I was going to 'receive a loan'.

Thank you for clearing it up!

Zoynal98

Anytime!