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Recording Loans

When you borrow money, you need to record as an asset the receipt of cash or the item you purchased on credit, and you must record the liability that offsets that asset. If the loan will be paid in full within a year, it is a current liability. If the payback period will be longer than one year, a long-term liability exists. This example shows how to set up a long-term loan.

Record a Loan

Press Ctrl+A to open the Chart of Accounts list.

Press Ctrl+N to open the New Account window.

Select Long Term Liability as the account type.

Enter a name for the loan.

Indicate whether this is to be classified as a subaccount.

Enter a description for the loan.

Enter an optional account number and tax line for the loan.

Click OK.


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