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Accounting treatment

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B PRASANNA KUMAR

student

21 Points Posted on 29 March 2020

Accounting treatment with respect to Loans and advances extended by partners to the Firm/Co.

Replies (2)

Quick Summary

This discussion clarifies the accounting treatment for loans and advances provided by partners to a firm or company. Following the mercantile basis of accounting, interest on these loans should be recorded on an accrual basis and presented as outstanding interest under current assets. Loans and advances represent debt obligations that appear on a company's balance sheet as liabilities.

CA Akshay Poriya

job in industry

188 Points Posted on 29 March 2020

As per fundamental accounting concept, the accounting treatment shall follow is on mercantile basis, the interest on loans &advanced recorded as per accrual basis, and shown as a outstanding interest on loan, under current asset.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 30 March 2020

Loans and advances are general descripttions of debt obligations companies owe and must show on their balance sheet as part of total liabilities. Formal contracted loans are typically designed as "notes payable" on a balance sheet, whereas advances or purchases on credit are recorded as accounts payable.