'Loan Receivable' T Account

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RecovR_Massage
RecovR_Massage Registered Posts: 7
in AAT Level 3 (Level 6 in Scotland)
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!

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  • Zoynal98
    Zoynal98 Registered Posts: 65
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    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
    RecovR_Massage Registered Posts: 7
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    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
    Zoynal98 Registered Posts: 65
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    Anytime! :)

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