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Thread: Cash Book Allocation Query

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    Cash Book Allocation Query

    I am allocating my cash book and on the payments side, I have an amount that was taken out of the "business"account and transfered in to a personal account in order for a loan to go through.When allocating,what General legder code should I allocate to in this case?

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    Sounds like it was from the business to the owner for a personal loan? Then I will use drawings or a loan account

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    Thanks, that's what I searched for however the loan account is under Investnments...Is this correct?

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    Don't think the loan account should be under investments. Should be under Liabilities/long-term borrowings

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    Could be an investment, but probably better under assets, either short term or long term depending on the terms of the loan. Sorry prettypegagirl, don't think it should be in liabilities.

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    BusFact, can you perhaps explain why you see it as an investment or asset?

    The company owes the director money thus to me it is a liability - The director would like his/her money back
    Investment and assets are something that can be converted to cash - I can't convert a loan to cash?

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    Thanks for your help, I was told to allocated it in the company shareholders loan account on the payments side and the bank balanced correctly.

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    Quote Originally Posted by prettypegagirl View Post
    BusFact, can you perhaps explain why you see it as an investment or asset?

    The company owes the director money thus to me it is a liability - The director would like his/her money back
    Investment and assets are something that can be converted to cash - I can't convert a loan to cash?
    This seems to depend on how you interpret the OP.

    We're agreed the company paid the money. But was it to repay a loan to the company, or was the payment made as a loan from the company?
    The trouble with opportunity is it normally comes dressed up as work.

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    I agree with Prettypagegirl, no matter what. There are only two types of investments in accounting terms, a listed investment and a non-listed investment. That means shares held in other entities. "Investments" with banks are also not investments; they are various types of bank balances.
    (There are others, but very off the wall and not applicable to us plebs)

    Loans to are simply current or non-current assets, and that includes shareholders and / or directors.

    Loans from are current or non-current liabilities.

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    Quote Originally Posted by prettypegagirl View Post
    BusFact, can you perhaps explain why you see it as an investment or asset?

    The company owes the director money thus to me it is a liability - The director would like his/her money back
    Investment and assets are something that can be converted to cash - I can't convert a loan to cash?
    I understood the OP to be saying that the company lent money to the shareholder so that they would have enough funds for a private matter. That's why I saw it as an asset. I suppose the OP is a bit ambiguous and can be read in different ways.

    Fair point on investments Clive.

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