Accounting of loans and borrowings

Every manager of an enterprise of any organizational and legal form faces a periodic shortage of cash. The production process is characterized by a temporary lack of free financial resources, the replenishment of which is carried out at the expense of borrowed funds. Accordingly, the accounting of loans and borrowings is one of the most important aspects of the work of accounting.

As in every sphere, this area is also not devoid of certain nuances. It is more difficult for an accountant to reflect the moments of charging and writing off fines, penalties and penalties. As is known, accounting of loans and borrowings includes accrual of interest payments for the use of attracted capital. Often, commercial banks act as lenders, but also allocate other ways: for example, granting deferred payment by counteragents or a commercial loan, shares in the company's share capital .

Accounting for borrowed funds is based on a bilateral agreement or contract. This document not only shows the consent of the lender to provide the specified amount of money, but also includes the reasons and conditions for the operation of the contract. An obligatory condition, which must be present in the agreement, is the term and the return scheme, the security form, the interest rate and so on.

In order to get the desired amount, you should provide the bank with financial documentation that confirms the company's solvency. The employee of the credit institution checks the level of profitability, liquidity and other key indicators. In addition, the accounting records of loans and borrowings are checked for the existence of existing debts, and the dynamics of timely repayment of loans in the past is traced.

As a rule, lending is carried out for specific needs, that is, it has a strictly targeted nature. Therefore, it is the borrower's responsibility to strictly adhere to the previously approved estimates. Any deviation gives the bank the right to demand an immediate return of the debt. Accounting for loans and loans involves the reflection of the form and amount of collateral in the accounting documentation.

Allocate such types of collateral as surety, guarantee, pledge or insurance amount. The guarantee presupposes the third party's assurance of the client's solvency and honesty, in addition, under the contract, the guarantor is obligated to pay a part of the loan or the amount in full if it is impossible or unwilling to pay the payment. The guarantee is usually issued by banks that provide a written assurance of the borrower's reliability to another credit institution. A mortgage is a property or other right that is temporarily transferred to the bank as a guarantee of a loan repayment. In case of impossibility of a full return, the subject of pledge becomes the property of a commercial bank.

Accounting for loans and loans can be conditionally divided into types of credit depending on the period of provision for short- and long-term ones. The first are recorded in the account for settlements on short-term loans and loans, and the second, respectively, in the accounts "Settlements on long-term ...". Different accounts allow you to differentiate the purposes for which the funds received are used. Thus, the account for short-term loans reflects the amount of borrowed capital employed in working capital. And long-term lending is usually used to implement large and promising projects, for example, the construction of a housing complex.

As is known, credit institutions issue loans in foreign and national currency. However, accounting of all amounts is carried out only in the currency of our country, so the exchange is at the current exchange rate, and the resulting difference is credited to the account "Other income and expenses".