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nominal code for interest received

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Alex123
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nominal code for interest received

Post by Alex123 » 26 Sep 2019, 23:42

Hello,
I have to record interest on a loan made by our company to other company. I was looking for help on Sage website and I found under 'Record a loan made to another party' the following:
'7903/4910 Loan Interest Received Profit and Loss Overheads/Sales
The nominal code you use for loan interest received depends if you want the interest to appear as a sale or an overhead.'


I am confsed. Does it mean that interest received can be recorded using n/code 7903 or it is a 'typo' and I should use a revenue code 4XXX?

Thanks

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brucedenney
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Re: nominal code for interest received

Post by brucedenney » 27 Sep 2019, 10:54

Well it depends...

If you are a bank then you would certainly handle interest income as a sale.

If you are a normal business and you earned some interest on your bank current account, then offsetting this against bank charges is fine.

The accounts are there to provide the people running the business with insight, if the earning of interest was a significant income then it should be in a separate sales account, if it is an inconsequential amount that offsets the costs of banking then it is fine to treat it like that and post it to bank interest/ charges.

The same things goes for many other accounting decisions, depreciation, prepayments, accruals, you need to look at things in context and ask yourself is this a material amount an important, significant sum or is it inconsequential.
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Alex123
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Joined: 26 Sep 2019, 23:23
Sage Version: v2018 24 UK/Europe/Africa

Re: nominal code for interest received

Post by Alex123 » 29 Sep 2019, 16:36

Thank you

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