How to Account for Reimbursements

How to Create an Expense Account:

To record the reimbursement, create a liability account under Other Short-term Liability in your chart of accounts. Learn how to add a new account or category.

How to Enter an Expense Transaction:

First, create an expense transaction:

1. On the left-side menu, click Purchases and then Expenses.
2. At the top right, click 'New Expense'.
3. Enter the date of the purchase, a description, and the amount.
4. For the Account, select your reimbursement account.
5. For the Category, select the relevant expense category.
6. Add sales tax, if applicable.
7. Click 'Save'.

How to Bookkeep the Repayment:

Create a Reimbursement Account (if not already created)

1. Go to Accountant > Chart of Accounts.
2. Click the 'New Account' button.
3. In the Account Name field, enter a name such as "Reimbursement Account" or "Loan Repayment", depending on the nature of the transaction.
4. For Account Type, choose: Other Current Liability if you're tracking an amount that needs to be repaid, or Equity if it's a personal contribution or a non-liability transaction.
5. Click 'Save' to create the account.

How to Record the Repayment Using a Journal Entry:

Once you've received the repayment, you'll use a journal entry to reflect this in your books.

1. Go to Accountant > Journal Entries.
2. Click the 'New Entry' button.
3. Enter:
   - Date: The date of the repayment.
   - Description: A note about the repayment (e.g., "Repayment for loan").
4. Add the following lines in the journal entry:
   - Debit the Reimbursement Account (or your liability account) for the amount received (this reduces the liability).
   - Credit the Bank Account for the same amount (this increases your bank balance).
5. Click 'Save'.