Allowance for loans

Every Manager of any legal organizational form is facing periodic shortages of funds.For the production process is characterized by the temporary lack of available financial resources, completion of which the borrowed funds.Accordingly, account credits and loans is one of the most important aspects of accounting.

As in every area, this area is also not without certain nuances.To reflect the accountant difficult moments charges and cancellation penalties, sing-and penalties.As is known, account credits and loans includes accrued interest payments for the use of the capital raised.Often, as lenders are the commercial banks, but recovered other ways: for example, the provision of deferred payment or contracting of commercial loans, shares in the share capital of the company.

Accounting for borrowing based on a bilateral agreement or arrangement.This document is not only evidence of consent of the creditor to provide a specified amount of money, but also includes the justification and conditions of the contract.A prerequisite that must be present in the agreement is considered to be a term and return scheme, form of security, the interest rate and so on.

In order to get the desired amount, you should provide the bank with financial documents confirming the solvency of the company.A member credit institution checks the level of profitability, liquidity and other key indicators.In addition, verified accounting of credits and loans for the presence of existing debt, as well as the speaker traced the timely repayment of loans in the past.

As a rule, credit shall be given under certain needs, ie a strictly targeted.Therefore, the responsibility of the borrower includes strict adherence to pre-approved budget.Any deviation gives the bank the right to demand immediate return of the debt.Accounting for loans is to measure the shape and size provide the documentation of accounting.

There are such types of collateral as a guarantee, warranty, guarantee or insurance amount.The guarantee requires third party certification of the solvency and integrity of the client, in addition, the guarantor is obliged under the agreement in the event of inability or unwillingness to pay the redemption payment on their own or part of the loan amount in full.Warranty, usually issued by a bank providing a written assurance about the reliability of the borrower's other lending institutions.The pledge is a property or other rights that are temporarily transferred to the Bank as a guarantee of repayment of the loan.If you can not fully return the collateral becomes the property of a commercial bank.

Accounting for loans can be divided into types of credit depending on the length of the short and long term.The first settlements are recorded in the account for short-term loans and credits, and second, respectively, in the accounts of "Payments for long-term ...".Other accounts make it possible to distinguish between the purposes for which the proceeds are used.For example, by short-term loans reflects the amount of borrowed capital employed in working capital.A long-term financing is commonly used to carry out large and promising projects such as the construction of housing complex.

As you know, credit institutions issue loans in local and foreign currency.However, consideration of all sums is carried out only in the currency of the country, so the funds are exchanged at the current rate, and the difference is related to the account "Other income and expenses".