Directors Loan Account
jowettenterprises
Member Posts: 5
In my previous product (Solar Accounts) I had my "Directors Loan Account" set up under Liabilities (possibly at my accountants advice), not I find "Owner Investment / Drawings" under Equity. What's the right approach for this in the UK? Is this subject to regional differences?
Understanding what account is for what is something I'd really appreciate a thorough explanation of. Other account names I have to place/understand include: Accruals, Balancing Account, Current Earnings (cf Retained Earnings), Share Capital.
I wonder if being able to create categories (and subcategories) might help?
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Also placing Tax Liabilities (Corporation Tax, Income Tax & NI)
Hi Daniel! I reached out to one of the accountants on our team here at Wave and he wrote to me:
Directors Loan Accountis simply a record of all transactions between the company and the director(s). You may also hear it being referred to as a DirectorÛªs Current Account or a DLA. ItÛªs the same thing. The amount owed to or from the director. If there are multiple directors in the business, each will have a separate directorÛªs loan account in the balance sheet. The DLA is a balance sheet account of course because the balance is either:
Û¢ an asset ÛÒ money owed to the company or,
Û¢ a liability ÛÒ money owed to the director.
Accrued expenses are reported in the current liabilities section of the balance sheet. Accrued expenses reported as current liabilities are the expenses that a company has incurred as of the balance sheet date but have not yet been recorded or paid. Typical accrued expenses include wages, interest, utilities, repairs, bonuses, and taxes.
Accrued revenues are reported in the current assets section of the balance sheet. The accrued revenues reported on the balance sheet are the amounts earned by the company as of the balance sheet date that have not yet been recorded and the customers have not yet paid the company.
Retained Earnings: Generally, the amount of a business's retained earnings is the cumulative net income since the corporation began minus all the dividends that the corporation has declared since it began. The amounts are recorded in the Retained Earnings account, which is reported in the Equity section of the business's balance sheet.
Share capital: is the money invested in the business by the owners. Hence it will be reported in the Equity section of the business's balance sheet.
Tax liability refers to the amount legally owed to a taxing authority as the result of a taxable event.