When to Spend Money, Transfer or Journal entry?
I have some entries I am unsure how I should be entering.
1. When I take money for Owners Drawings, is that a spend money from bank acct to cash drawer (my cash drawer is all private money and private accounts combined, I have no business cash.) Or should I do a Transfer money from bank acct to cash drawer?
2. Loans interest - Are they entered as a journal entry between the loan acct (liability) and the bank debit interest expense acct?
3. Loan repayments - are they a spend money or journal entry?
I hope this all makes sense.
Hi Beulah
Generally speaking, you would use:
- A journal entry to record a large transaction or an accountant-provided transaction. There are no restrictions on accounts* for this window.
- A transfer money transaction would be between accounts that have the account type of bank or credit card
- A spend money would commonly be when a supplier/contact is required for selection and there is a bank account or credit card account type involved.
*Exception being the Current Year Earnings account would not be selectable.
To directly answer your questions it would depend on the accounts types involved into what type of transaction would be best:- Commonly Owners Drawings would be an equity account - so Spend Money or Journal Entry would be best
- Is the loan account set up to have the account type Credit Card? If so, Spend Money it. If not, would be a journal
- Similar to point 2.
I would recommend speaking to your accountant in regards to the best accounts, tax, amounts and type of transaction you should be recording.
- A journal entry to record a large transaction or an accountant-provided transaction. There are no restrictions on accounts* for this window.
