Expense Claims Double Entry for cash injection

1

How do I make a double entry for a cash injection expense claim?

2

You do not. A cash injection is a contribution of capital. Depending on your form of organization, you would Receive Money in an appropriate cash account (which can be a bank account), allocating the transaction to owner’s equity if a sole proprietor/trader or a partner’s contributed capital account if a partnership. If you are a stock company, things will be more complex, as you either need to obtain more stock ownership or set the contribution up as a loan to the company.

Expense claims are only for things someone purchases on behalf of the business with personal funds.

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3

Thanks A lot for the clarification. So if I was to enter it as a loan what would be the process?

4

Create a liability account for the loan, Receive Money and allocate the receipt to the loan. When you make payments, Spend Money and allocate to the loan. If interest is paid you need an interest expense account and a line item for the interest.

5

Thanks again. Another clarification. What do you mean by “when you make payments…” does it mean paying back the loan or using the money received as loan for payments?

6

I mean paying back the loan. Anything you purchase, just Spend Money and allocate to the appropriate expense account.

7

Thanks once more. I have done that. I am not however able to see it reflected as income on the Profit and Loss side of the accounts, and since the expenses are related to the income above it, how will it be reflected when you spend it?

8

A loan is not income in accounting. It is a liability. If you are new to double-entry accounting, an excellent and free source of information is at http://www.accountingcoach.com.