Accounting of credits and loans

Every head of an enterprise of any organizational-legal form of facing periodic shortage of funds. For a production process is characterized by a temporary lack of available financial resources, the restoration is being financed by borrowed funds. Accordingly, the accounting of credits and loans is one of the most important aspects of accounting.

As in every field, this area is also not devoid of certain nuances. For the accountant it is more difficult to reflect the points the earning and redemption penalties, singing and penalties. As you know, the accounting of credits and loans includes the accrued interest amounts for the use of borrowed capital. It often happens that the creditors are commercial banks, but produce other ways: for example, the deferred payment of the counterparty, or a commercial loan, a share in the share capital of the company.

The Account of borrowed funds is based on a bilateral agreement or contract. This document not only confirms the consent of the lender to provide a specified amount of cash, but also includes the rationale and conditions of the contract. The obligatory condition that must be present in the agreement, is the period of the repayment plan, form of collateral, the interest rate and so on.

To get the desired amount, you should provide the Bank with financial documents confirming the solvency of the company. Employee of the credit institution examines profitability, liquidity and other important indicators. In addition, a verified accounting of credits and loans to determine the presence of existing debt, as well as trace the dynamics of the timely repayment of loans in the past.

As a rule, loans are granted under certain needs, that is strictly targeted. Therefore, the obligations of the borrower included strict adherence to a pre-approved budget. Any deviation gives the Bank the right to demand immediate return of debts. Accounting of credits and loans expected to reflect the shape and size ensure documentation of accounting.

There are the following types of collateral as surety, guarantee, collateral or insurance amount. The guarantee involves a third party assurance of the solvency and integrity of the customer, in addition, under the contract, the surety shall in case of impossibility or unwillingness of repayment of payment to pay part of the loan or the amount in full. A guarantee usually issued by banks that provides written assurance about the reliability of the borrower other lending institution. Bail is a property or other rights that are temporarily transferred to the Bank as a guarantee of repayment. In the case of the impossibility to fully return the collateral becomes the property of the commercial Bank.

Accounting of credits and loans can be divided into types of credit depending on the terms of short - and long-term. First recorded on the account calculations on short-term loans and borrowings, and second, respectively, in the accounts "Calculations on long-term…”. Different accounts allow to distinguish between the purposes for which the funds are used. So, the score for short-term loans reflects the amount of borrowed capital employed in working capital. And long-term loans typically used to implement large and promising projects such as construction of a residential complex.

As you know, lending institutions give out loans in foreign and national currency. However, the inclusion of all amounts shall be effected only in the currency of our country, therefore, the exchange funds at the current rate, and the resulting difference is attributed to the ‘other income and expense”.