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Contributing User
Posts: 6
Registered: ‎16-11-2010

accounting for a loan to another company

Hi there,


how do you account for a loan to another company?


i know how to setup a loan to a bank as a liability, but i am not sure if it is the same procedure if setting up a loan to a company.


does anyone know what the best approach is?



Valued Cover User
Posts: 254
Registered: ‎01-07-2010

Re: accounting for a loan to another company

The loan is an Asset as you are owed the money. So set up a new account in the Assets section. Whether it is Short or Long Term, depends on the details. If you have advanced the outside business the loan in cash, you simply debit the new Loan Account from your Cash Payments.