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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2607
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I have an expense account from which I draw funds in advance

Customer Question

I have an expense account from which I draw funds in advance for business trips. I credit my checking account (Cash) and I debit an Accounts Receivable Account (Advance on Expenses) for the initial transaction. When I submit my Expenses Report at the end of the month it is clear that the Advance on Expenses account gets credited and the individual accounts that apply to the expenditures get debited. However, I want to know how I deal with any differences. Suppose I take an Advance on Expenses of $2,000 and I only have $1,800 in expense receipts to post. I want to pay off the $200 excess that I withdrew from the company. How do I post the $200 transaction?
Submitted: 11 months ago.
Category: Finance
Expert:  Lane replied 11 months ago.



Unless I'm missing something here you seem to be doing this backwards.


Normally, a cash advance is recorded with a DEBIT to an account such as Advance to XXX or to Other Receivables: Advances.


The CREDIT will be to the account Cash. If the cash advance is expected to be repaid within one year, the account Advance to XXX will be a current asset account.


Then when you repay the advance, the Cash account is debited and the account Advance on expenses is credited.

Expert:  Lane replied 11 months ago.

An advance is a receivable (an asset to the company)