Share this content
0
794

loan to staff - asset or liability

is a staff loan asset or liability

Didn't find your answer?

Search AccountingWEB

Hello all; can anyone please clarify a point and set my mind at rest; my client has loaned a staff member a sum of money to be repaid over 7 months direct from his wages;  The accountant who does the payroll has set up an employee loan nominal but put it to current liability; i feel it should be a current asset as it is money owed back to the company and not money the company owes out.  Which is correct?

Replies

Please login or register to join the discussion.

avatar
By jcace
15th Mar 2019 23:38

The original loan should have been treated as an asset, with the subsequent repayments reducing the asset until cleared.

Thanks (0)
16th Mar 2019 04:33

By the force of double entry it’s a debit balance wherever in the nominal ledger it is set up. If it’s in the current liabilities area it will be a negative one.

Thanks (0)
16th Mar 2019 09:43

The accountant-who-does-the-payroll isn't much of an accountant.

Thanks (0)
avatar
16th Mar 2019 09:46

You are correct.

Thanks (0)
avatar
16th Mar 2019 11:51

Perhaps they just wanted it to be near its friends Net pay control AC, PAYE control AC and pensions ctl AC which would normally be Crs

Doesn't make it right though...

Thanks (0)
avatar
16th Mar 2019 17:11

Thank you everyone; as I suspected. Unfortunately this particular company have attempted to attribute their errors to me in the past; hence no confidence in them. I have now requested from Xero if I can get confirmation of who filed the payroll journal and set up the nominal as I cannot see anything on history and notes.

Thanks (0)
17th Mar 2019 09:57

You don’t say whether the problem is with the accounting entry having been put through back to front (with the other effect being that the bank account does not reconcile) or whether all that is correct but the staff loan has been shown as a negative creditor in the balance sheet. The former error is far more grievous than the latter, so if is only the latter I wouldn’t get too excited.

Thanks (0)
Share this content