I have a query on the use of DLA and correct accounting treatment. I'm newly qualified but relatively inexperienced and am seeing some year-end adjustments being put through the DLA which I find odd.
My understanding of the DLA is that it is simply the director's account to keep track of money in/out and that the respective Dr and Cr entries would reflect this.
An example of what I find odd is an explanation of a closing DLA as follows (this is the workings provided): Opening balance Cr £8,748; drawings throughout year Dr £9,602; Expenses owing: Cr £3,693; trade debtors recorded incorrectly in prior period and not reflected in bank Cr £552.
DLA closing balance: £3,391 (£8,748-£9602+£3693+£552)
So my question is two parts: Surely the last adjustment has no business in the DLA? And are there occasions or accepted practice when anything other than money in/out are acceptable to put through DLA as I can't see that it ever would? The above seems to be to simply be using the DLA as a balancing account!
Thanks in advance.