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Loan account showing as positive

I purchased a kitchen for our business, and paid for it with the kitchen companies finance company Barclays.

So I created a created a loan account with no opening balance.
I then created a purchase and applied a payment from the loan account to cover the invoice.

In the account it shows a minus balance, but on the chart of accounts it shows the loan as a positive balance. Im guessing I’ve done something wrong but the accounts transaction list looks fine.

Shouldnt the nominal account show the loan as a deficit?

Hi,

a loan account balance should be on the credit side of the chart of accounts because it is a liability.

It’s only assets and expenses that normally have debit balances, everything else normally has a credit balance - that’s the way I remember it :slight_smile:

For bank accounts the nominal ledger has money in as debit and money out as credit. This is counter intuitive if you’re used to the statements your bank sends you but it is correct, remember the statement from the bank is expressed from their perspective whereas QuickFile nominal accounts are from your perspective.

I think of credit and debit in terms of the movement of funds - credit is where the money comes from and debit is where it goes to. So when you take out a loan the money goes from (credit) the lender and to (debit) your bank account, and when you repay it goes the other way - credit current account and debit loan.

This way of thinking about it also makes bank statements make sense - from your QuickFile perspective money out of your current account is credit bank and debit whatever you spent it on but from the bank point of view it’s credit (from) their big pile of cash and debit (to) customer 12345678.

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