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What happens if I debit a loan account? Debits are not positive, a debit to a loan account is a negative that reduces it. If I issue a refund that might be a de
by onphonenow 5y ago
What happens if I debit a loan account? Debits are not positive, a debit to a loan account is a negative that reduces it. If I issue a refund that might be a debit to an income account (that is a negative to the account total).
- darcys22 5y agoThere are both debit and credit loans depending on who is loaning who. The two parties are the person recording the transaction and an external third party.\\ A debit to a loan account only reduces it if it is a credit loan. A debit to a debit loan account actually increases it (Think a bank giving further money to their customers). If you are debiting a loan account it means the external third party is giving cash to the person recording the transaction. If you issue a refund then you are giving cash to the external third party so its a negative (credit). Then the positive side of the journal is against your income account (reducing your income). Debits and Credits are not positive and negative, but they are a concept that was invented before negative numbers existed and are perfectly represented by positive and negative numbers.