How do business loans affect the p & l?

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Guest

I am trying to set up a P & L for a new business I set up for my son. Do I
list the loans I make to the business as "income" on the P & L?? Do I list
the loans as an expense item? Please advise.
 
The loans you make to the business have NO P&L impact.
Cash and Loans are balance sheet accounts.

Following the accounting equation:
Assets = Liabilities + Equity

The loan is recorded as a Debit to "Cash" (increasing Cash)
offset by a Credit to "Loans" (Increasing Loans)

Does that help?
--------------------------

Regards,

Ron (XL2003, Win XP)
Microsoft MVP (Excel)
 
Yes this helps and I thank you for the information. I knew I needed help
when I set up the P & l showing the loan monies as income and then showing a
profit when I knew we were not profitable. Thanks again.
Dale
 
Microsoft has a free accounting package that you can download - Accounting
Express or some such name. Far better to use a canned program, even a free
one, than trying to re-invent the wheel.
 
Going to download now. Thanks.

Dale

Duke Carey said:
Microsoft has a free accounting package that you can download - Accounting
Express or some such name. Far better to use a canned program, even a free
one, than trying to re-invent the wheel.
Click to expand...
 
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