The loan of honor finances equipment

For best accountancy training Best school of accountancy In Pakistan. The purchase of materials with the proceeds of a loan of honor must be accounted for as follows:

We debit:

The account of class 2 "Fixed assets" concerned,

Account 44562 'VAT deductible on fixed assets'

And we credit:

Account 404 "Capital Suppliers" if the business directly buys the property,

Or account 4551 "Shareholders - Current Accounts" - account 108 "Operating Account" if the project holder makes the purchase.

For example, accounts 2154, 2181, 2182, 2183 and 2184 may be used for purchases of industrial equipment, fixtures and fittings, transport equipment, office and computer equipment or furniture.

Note: Some goods of low value (less than 500 Euros excluding taxes) may, as an option, be recognized directly as an expense and not as fixed assets. In this case account 6063 "Maintenance and small equipment supplies", account 445661 "VAT deductible on other goods and services" should be debited and credit account 401 "Suppliers" should be credited. For a complete study of this subject: goods and equipment of low value.

The loan of honor finances purchases of material and supplies

Where the purpose of the loan is to finance the acquisition of raw materials, supplies or merchandise, it is accounted for as follows:

We debit :

The account for Class 60 'Purchases' concerned,

Account 44561 "VAT on other goods and services"

And we credit:

Account 401 "Suppliers" in the case of direct purchase by the company,

Or account 4551 "Associates - Current accounts" ~ account 108 "Account of the exploitation" in case of purchase through the project holder.

For example, purchases of consumable materials and supplies may be recorded in account 602, purchases of goods in account 607, purchases of studies and services in account 604, etc.