I have recorded several expense claims for business purchases and expenses paid out of a personal bank and visa account. I wanted to know if the Credit Account (I need to set up for reimbursement into those accounts from my business account) should be classified under Equity or Liability as a sole trader?
I would set up an Equity account called say current, so that if you decide not to reimburse then the transaction is complete with thexpense recorded and your investment in the business increased. you can also use this account for say if you buy things through the business for your own personal use (eg supplier wont sell unless you have an ABN number or this gives wholesale price) or if you take cash out from the business apart from your salary
Thanks. Makes sense. If I set up an account called Current under Equity, will it be good for reimbursing too as this is what I would be primarily doing?
You would make a payment from your bank acccount to the Current account. Original expense paid by you means the business owes you money, When business reimburses you it owes you less
The current account then shows all the transactions in and out excluding profit between you and the business, but obviously the next step is to get a business credit card and only use yr personal credit card if the business one is maxed out or not with you. At the end of the year I would gen journal all the Rev and expense accounts into it and then journal bal to yr Capital account in equity or even into a new account in equity called say 2013_14
Good luck with the business and for someone like you this program is perfect. It has good accounting double entry logic but is easy to enter data for a non accounting background person
Thanks Aussieg for the detailed reply. Much appreciated. I did set up a business bank account but had made several transactions for business just before that and then instances where I could only pay via visa.
I got a bit lost with the end of year stuff. You used some abbreviations: Is “gen journal” the Journal Entry section? Is Rev short for Revenue? and what would be considered my revenue account? Then when you say “journal bal to yr Capital account”, do you mean to make new journal entry?
I could really use a short video instruction