[GNC] Directors loan - do I need an expense account?

[Michael or Penny Novack]

On 12/9/2021 2:04 PM, Gyle McCollam wrote:
> If the loan is to the company, as stated in your original email, it is a liability of the company.  Stan is incorrect, but if the company makes a loan TO the director, then it would be an asset of the company and he would be correct.
>
I will repeat that I lack "qualifications" to give accounting advice and 
in any case the question is not about my jurisdiction. But I vaguely 
recall that such "insider" transactions are handled under "equity". 
That's where the accounts would be representing the shares of the 
owners. The point is that when an director/part owner borrows from the 
company, it is more like withdrawing part of his or her investment. Yes, 
hopefully temporarily, which is why being considered a "loan" .

Seriously, if not going to get professional advice at least look the 
matter up in an accounting text to see what the proper treatment of this 
situation is and for your jurisdiction.

And it might make a (big) difference if this were a "secured loan" 
backed up by something other than the borrowers share of the business. 
But then I think it would be called something different than a "director 
loan".

Repeat, get professional advice or at least learn the accounting 
yourself. This is an accounting question, not a gnucash question.

Michael D Novack