No, a credit line is not an asset. If you owe money on your line then it would show up as a liability on your balance sheet. When you list the line of credit, you only have to record the portion you have actually withdrawn, not the whole amount.

How do you account for a line of credit?

When using a line of credit, a line of credit account should exist in your chart. This account should be reflected as a liability. In the example, $5,000 is receipted into the bank account and is also setup as a liability. Now that you have drawn money from the line, the liability must be present on your Balance Sheet.

What kind of account is line of credit?

A line of credit is often considered to be a type of revolving account, also known as an open-end credit account. This arrangement allows borrowers to spend the money, repay it, and spend it again in a virtually never-ending, revolving cycle.

Is a loan a current liabilities?

Bonds, mortgages and loans that are payable over a term exceeding one year would be fixed liabilities or long-term liabilities. However, the payments due on the long-term loans in the current fiscal year could be considered current liabilities if the amounts were material.

How do I set up a line of credit?

Go to your Chart of Accounts, click the drop-down for Account in the bottom left and choose New. Select the radio button for Loan when asked to choose the account type. Click Continue.

How does a line of credit loan work?

In order to qualify, a borrower must meet the lender’s minimum credit and income thresholds. Once approved, the lender pays for the property, leaving the borrower to make regular principal and interest payments until the loan is paid off in full.

Where does interest go on a line of credit?

Set up a general ledger account called Interest Expense in the expense section of the general ledger. Record funding on the line of credit as an increase to the checking account in which the loan funds were deposited. An increase to a checking account on the general ledger is a debit.

How do you record funding on a line of credit?

Record funding on the line of credit as an increase to the checking account in which the loan funds were deposited. An increase to a checking account on the general ledger is a debit. Record the amount of the funding in the Line of Credit Payable account to reflect the liability now due to the lender.