 and so let's just pretend like that these Skillshare items were from uh from us the owner we put money in now if we put money in then we probably wouldn't have a Skillshare thing here it would just say that there was a bank deposit of some kind we might not have much more detail than that other than it's a deposit so then we would say okay the only thing we would know is like the dollar amount which might be conspicuously even oftentimes because when you make a deposit you don't put 1,277.55 you probably put 1,300 or something into it right so that's one way you can kind of differentiate the deposits but also of course if you have the bank feed detail when the deposits are coming in from customers that's another way that you can kind of differentiate it so if I go into it and I say okay let's assume that this one was a deposit from let's say it came from a loan that we took so I'm gonna say this is gonna be a Skillshare let's just call it Skillshare Bank Skillshare Bank assuming it's a loan of some kind and so I'm gonna add that now it's not exactly a customer but I'm gonna add it as a customer because it's a deposit it's not a customer or vendor really the point is it's not going to go to an income account it's got to go to a loan account so I'm gonna set up a new account for it adding account and I'm just gonna call it a other current liability account and I'm gonna call it a loan payable account loan payable account so that's good now note that if you have multiple loan payable accounts there's other issues with regards to the loans that you put on the books uh and let's talk about that in a second here but you might have like a loan parent account and then you might put the other loans underneath the parent account but right now I just want to concentrate on the fact that we're not recording it as income so I'm going to save it and close it and so there we have it we could we probably wouldn't set up a rule necessarily because the because this isn't a transaction that's going to happen all the time what you want to do with all the other rules that you set up is make them specific enough so that they would not pick up as income this this deposit from the bank right because the other rules are going to pick up only the items that are that are somewhat specific if you have a very broad rule that says old deposits I want you to record as income then you're gonna you're gonna miss these deposits that might come from you or the bank and mistakenly record them as income instead of as a as a loan so let's see what this would look like if we record it let's add it and so boom I'm going to go to the balance sheet and then scroll up top and run it so if I scroll up top and run it I can go down to the checking account so if I go to the checking account again I can sort it and customize it up top filtering it possibly by transaction type looking at just the deposits and then I might look at the name and I might want to look at the bank what did I call it I called it skillshare bank skillshare isn't really a bank obviously but there it is there's the deposit then if I go into it it's coming from a deposit form so it's a deposit form but now it's not going to an income line like we did last time but instead to a loan going back to the balance sheet the other side instead of going to the income statement is now down here in a liability account for the loan payable so going into that there's our loan payable account so going back on over now just a general rule with the loans uh let's just look at our our accounting equation assets equal liabilities plus equity assets are what we have in the business that they're in the business instead of us having them personally because we're using them in order to help generate revenue in the future and we're doing so because we think the business is capable of getting a higher return than us taking the money out and then putting it into like stocks and bonds for example we finance the assets property plants and equipment inventory primarily by either taking out a loan right we take out the loan to buy the property plants and equipment finance it so that we can then generate revenue in the future or through ourselves our own investment the equity from the owners either us investing it putting it in from our personal side or us retaining the money that has been earned in the business reinvesting it in the assets that we're purchasing in the business to further grow the business that's going to be the general idea why we would have the the the the liabilities and the loans so notice it's a little bit complex when you have to deal with the financing because kind of you're not on it on you know specifically at like a cash system per se now because now you've got to track this loan payable and there's going to be an added component with the loan payable which is the financing of the loan which is interest so just a couple things with loans in general when you put the loan on the books you might have multiple loans so in that case you might make up a parent loan account and then make multiple subsidiary accounts to it listing out each of the financial institutions you got the loan from and possibly the last four digits of the loan number so for internal reporting you can track each loan by its loan balance and for external reporting you can collapse it to one loan account so that you can give it for external reporting purposes or tax preparation if necessary also you might have short-term and long-term portions of the loan if a loan that you took out is going to extend beyond a year and you're paying it in installments like our natural format that we're often most used to like a mortgage type of loan you're paying off in same installments you could have a short-term and long-term portion of the loan now it's not useful it's not helpful to break out short-term and long-term every time you record a payment to the loan because that's tedious and we can't tie out the balance to the loan so in that case I would recommend having one account for the loan payable breaking out short-term and long-term portion periodically at the end of the year or the end of the month so that you can have that for external reporting purposes tax preparation purposes and managerial purposes to kind of make sure you got the cash flow to pay off the upcoming loan balances and then you reverse it so you have only one account so that when you make the actual payments they're going to that loan account another issue with the loan is that maybe you don't get the amortization schedule because you just get the terms of the loan they might not include an amortization table breaking out interest and principle of each payment you can make one if they give you the loan terms in excel or you can possibly have your accountant or CPA or tax preparer help you out with an amortization table and then when you make the payments to the loan there's going to be a principal portion and an interest portion of the payments to the loan what you would like to do what we've been doing over here on the bank feeds is trying to make the payments on the loan in such a way that they will be automatic automating them to the extent we can because there's a difference between the interest and principal payment even though the decrease to cash is the same it makes it difficult to automate the payments so that's another issue that we have with regards to the loan payments a couple ways you can deal with that you could every time you make a loan payment you can go in there see it going through the bank feeds and adjust it to match the amortization schedule properly recording interest expense and loan reduction or you could you possibly could just make your payments decreasing all of it to the loan payable account ignoring interest for the time being recognizing that at the end of the year or the end of the month you or your accountant is going to take the amortization schedule and then adjust the interest versus the the principal portion of the loan and break out the short term and long term portion periodically if you use that system you can automate the payments right then I can automate the payments and I can just do periodic adjustments at the end of the period and that might be a way to go if you're trying to be a bookkeeper that is trying to automate everything as much as possible but you have to be working with a good CPA or accountant that can make the adjusting entries at the end of the period