My boss recently paid for personal fuel on the business debit card and said to record it as drawings. In our accounts system there is a director's account in his name but how should this transaction be posted?
The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
To be honest I wouldn't put a petrol receipt to a director's loan account, if this happens frequently the director's loan account will be messed up. Director's loans are normally funds loaned to the Company by the director for the funding of larger items.
I'd set up another account in the same area of the chart of accounts and call it Director's Current Account and put small items such as this in there.
-- Edited by semsley on Friday 2nd of July 2010 02:55:49 PM
Wouldnt the directors loan account and directors current account essentially be the same thing or are you just using the directors current account code to keep track of the small items and clear it down every so often.
At the end of the day both will need to be offset against a positive loan balance or paid back or be subject to P11d , potential tax (subject to limits) etc etc
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Forgive the typo's I generally do not proof read. Just lazy I guess!
It is the Director's Current A/c I've posted it to. There isn't a Loan account in the chart of accounts as yet but there will have to be as he's just transferred funds into the business a/c. Is it best to keep it separate or shall I post the transfer to the Director's Current a/c too?
Personally I would just keep track of all directors personal expenditure in one place.
In the year end financial statements they will all just be shown in one place anyway, either as an asset or liability depending on if overdrawn or not.
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Forgive the typo's I generally do not proof read. Just lazy I guess!
Wouldnt the directors loan account and directors current account essentially be the same thing or are you just using the directors current account code to keep track of the small items and clear it down every so often.
Yes using Director's current account to keep track of small items.
Although agree that they are essentially the same. Drawings is money the Director owes to the company whereas a Director's loan is money the company owes the Director and I don't find it good practise to have debits and credits on the same account.
I have to say, I use the directors loan account for both debits and credits and am yet to come up against any problems. At the end of the year I'd have to add them up anyway.
The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
