Trial Balance Bookkeeping Question

Trial Balance

Trial Balance

If you borrow money from a bank and you make a payment on the account, does your A/P (bank loan) and cash account both decrease?


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Aug 24, 2023
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starstarstarstarstar 		Borrow Money Bookkeeping
by: BB

Yes, if you borrow money from a bank and make a payment on the loan, your accounts payable (A/P) for the bank loan would decrease, reflecting a reduction in the amount you owe. Simultaneously, your cash account would decrease as well, since you are paying out money.

When recording this transaction, you would debit (decrease) the A/P account to show that you've paid off part of the loan, and you would credit (decrease) the cash account to show the outflow of cash.
Jun 11, 2018
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starstarstarstarstar 		Bank Loan Trial Balance
by: Stephanie

Hi,

Thanks for your inquiry. Yes, payments made against the bank loan would result in a decrease to both the cash account and loan account.

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Trial Balance Debits & Credits

How are Bank Deposit account, Dividends Paid, Loan Stock & Interest on Debentures recorded in the Trial Balance? Which do you debit, and which do you credit? Thanks.

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Aug 24, 2023
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starstarstarstarstar 		Bank Deposit Trial Balance Account
by: Stephanie

Here's a breakdown of how these items are typically recorded in the Trial Balance:

Bank Deposit Account: This is a company's asset, so it would typically be debited. A debit to this account reflects an increase in assets.

Dividends Paid: Dividends are a distribution of profits to shareholders, so they would typically be credited as a decrease in equity. It's a payment to owners, so it reduces the company's equity.

Loan Stock: This refers to a liability for the company, so it would typically be credited. A credit to this account reflects an increase in liabilities.

Interest on Debentures: This is an expense to the company, so it would typically be debited. A debit to this account reflects an increase in expenses.

Remember that in accounting, a debit (DR) usually signifies an increase in assets or expenses, or a decrease in liabilities, equity, or revenue. Conversely, a credit (CR) usually signifies a decrease in assets or expenses, or an increase in liabilities, equity, or revenue.

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