Question

Money Out can be recorded using the Expense or Check Onscreen Form. Which situation should not use the Expense or Check Onscreen Form to record Money Out?

Answer 1

The Expense or Check Onscreen Form should not be used for recording asset transfers between business accounts, loan repayments, or returning equity to shareholders, as these are not considered direct expenses or check payments for the business.

Step-by-step explanation:

Money Out in the context of accounting can generally be recorded through various means, including the Expense or Check Onscreen Form. However, these forms should not be used to record transactions that are not direct expenses of the business or payments by check.

One situation where you would not use these forms is when recording asset transfers. For instance, if you're transferring money between two business accounts, this is not an expense but an internal transfer, and it usually requires a different type of transaction recording called a transfer form.

Another scenario is when dealing with non-expense disbursements, such as loan repayments. Loan repayments are reducing liabilities rather than incurring expenses and typically have their specific forms or sections within the accounting software.

Additionally, if you return the owner's equity to shareholders or owners, this is a distribution of profit, not a business expense, and should not be recorded as an expense.