Accounting question regarding how to post when paying off a bank loan?Paying off a bank loan is a ____________ activity? operating financing investing operating if it was a short-term loan; financing if it was a long-term loan |
Accounting question regarding how to post when paying off a bank loan?Paying off a bank loan is a ____________ activity? operating financing investing operating if it was a short-term loan; financing if it was a long-term loan |
Financing
Good Luck!
Karl Sexton
Accounting On-Call
Brandon - Riverview Fl
(813) 641-4262
www.AccountingOnCall.com
Please note that a Bank Loan account will show a Credit Balance in your book. Hence
When you make the payment,
Credit Cash ( if you make cash payment) OR
Credit Bank ( if you pay through cheque) and Debit the Bank Loan account.
If you are completely closing the Bank Loan account:
Debit Interest account (with the interest charged by the Bank) and Credit Bank Loan a/c
Debit cash or Bank and Credit Bank Loan account ( for the full amount)
Paying off a Bank Loan account is an operating activity.