Meaning of Loan And Advance Assets in Tally Accounting
What is loan and advance in tally and how to maintain loan and advance in tally. Loan and Advance is the amount given by the owner of the company to another person at a fixed time and at a fixed rate of interest. When a businessman starts a business, he has to buy many types of assets. All these assets are fixed. But when the businessman lends some capital from his business to another person, then in tally it is known as loan and advance.
Also, Read:- What are groups in tally Accounting?
Loans and advances are given for a fixed period of time and when the borrower repays the loan, he also has to pay interest in lieu of the loan. Loans and Advances are assets for the businessman which are shown on the Assets side in the Balance Sheet. In simple language, loan and advance is said to be such an amount given by a company, then the borrower has to return it with interest after some time. This time can be 1 month or it can also be 1 year.
How can enter loan entry in tally
How to enter loan in tally? Before entering, it would be right to know whether the company is taking loan or the company is giving loan to any person. When the company produces an item, then the company also needs money and when the company gives loan from which other person, then it is the company’s liability to return the loan taken. When a loan of 100,000 / – is taken by the company from any person, then in this situation the company’s account is debited with Rs 100,000 / – and the person from whom the loan is being taken is credited to the person’s ledger.
The ledger of the person from whom the loan is being taken is put in the loan and liability of the company. But 100,000 / – loan is being given by the company to any person or institution, then this loan is assets for the company. While entering this loan in tally, the one to whom the loan is being given is debited from 100,000/- and credited to the company. While creating a person’s ledger, his ledger is added to the loan and advance assets.
What is loan and advances in balance sheet
Loans and advances are shown in the balance sheet on the side of current assets because loans and advances are a type of current assets for any company or institution, which will be received with interest after some time. It does not happen every time that the loan given is returned by the person. Many times it happens that due to the condition of the person not being right, he does not repay the loan taken from the company on time or will not return it intentionally. Such loans are called bad loans, due to which the company has to bear the loss. And when the balance sheet of the company is finalized, then bad debts are shown in the expenses. Good debt is good for any company but due to bad debt the company suffers.
How to bank loan entry in tally Accounting
Capital is required in the business to run the business smoothly. When the businessman does not have enough capital, the businessman also has to borrow money which is called loan. These loans are also taken from any person and are also taken from the bank. But when a loan is taken from the bank, then in which group the bank is put in the tally. When a loan is taken from which bank by the person or by the company, then it is put in this secured loan because it is taken for a fixed time. There are 2 types of loans in Tally and the loan taken by the bank is secure. Which the company will have to give back to the bank with interest. When a company takes a loan from the bank, the company’s account is debited and credited to the bank. And these loans show in the secured loan of the balance sheet.
What is the difference between loan and advance and loan and liability in tally
Loan and advance and loan and liability are opposite to the other. When a loan is taken by a company from any person or institution, then it is the liability of the company, which is a type of loan for any company. But the loan given is an asset which shows that the position of the company is correct. When looking at the position of a company, we always look at its balance sheet. If the assets of the company are more than the liabilities then the position of the company is good but if the liability of the company is more than the assets then the company is going into loss and the company has debt.