I was hoping someone can help me. I'm at University with an upcoming exam in Accounting. My degree is focused more on Business, but this is still a compulsory exam. I have no one else to ask so really hoping someone here can help.
On the Statement of Financial Position, a Director has loaned some money to his company in Year 1. In Year 2, he withdraws some money from the business's bank as a means of repaying some of the loan. On the SofFP, is this recorded as simply as lowering the bank balance and subsequently the 'creditors amount falling due within a year'?
Or do I need to record something in the equity section too? Doing what I've done above does balance the statement, but I want to check. And as this isn't an operating expense I am guessing it stays away from the income statement?!
If anyone would be kind enough to clarify this form me it'd be very helpful. Thanks!