1. Setup a Liability (Loan) account.
   
2. Setup an Other Income account (linked to the Liability account)
   
3. Setup an Other Expense account (linked to the liability account)
   
1. These accounts will be used to show the income and expenses to and from the loan.
   
2. This income account will be used for withdrawing funds from the loan. Use this account to set the loan principal, and any time the amount owing needs to increase (i.e. Interest, etc.)
   
3. This expense account will be used for loan repayments (or to reduce the amount owing on the loan).
   
4. Set up an Asset account.
   
1. This Asset account is used for the purchase of the asset.
   
5. Set up an another Other Expense account (linked to the Asset account).
   
1. This expense account is used for the purchase of the asset. The purchase cost will be used to set the initial value of the asset. The value should include any GST and be before any trade-ins or deposits.
   
6. Set up an Interest account.
   
1. This expense account is used for the interest component paid on loans.
   
7. Add a Cashbook transaction to record the purchase of the asset via the loan.
   
8. Add a Cashbook transaction to record a loan repayment.
   

1. Click on the Chart toolbar icon
   
2. Click on the Liabilities tab
   
3. Click on the Add button
   

Account Code: e.g. 701.01 (For this example we have added a sub-account to the existing 701 Loan Account)

Step 2: Setup an Other Income Account

• Still in  Chart .
• Click on the  Income  tab. (Scroll down to see if there is any existing Loan Account Received accounts.)
• Click on the  Add  button.
• Add your  Other Income  account details.
  
  • Account Code : e.g. 082.01(For this example we have added a sub-account to the existing 082 Loan Account - Received)
  • Tick the  Sub-Account of  check box.
  • Sub-Account of : 082 Loan Received
  • Description : e.g. JD Tractor Loan Received
  • Account Type : Other Income
  • GST Category : 11. Non-reportable Receipts
  • From the  Balance Sheet Link  drop down menu, select the Liability Account you have just created in Step 1 (eg. 701.01 - JD Tractor Loan Account)
• Click on the  OK  button to save.

Step 3: Setup an Other Expense Account

• Still in  Chart .
• Click on the  Expense  tab. (Scroll down to see if there is any existing Loan Repayments accounts.)
• Click on the  Add  button.
• Add your  Other Expense  account details.
  
  • Account Code : e.g. 195.01 (For this example we have added a sub-account of the existing 195 Loan Repayments)
  • Tick the  Sub-Account of  check box.
  • Sub-Account of : 195 Loan Repayments
  • Description : e.g. JD Tractor Loan Repayments
  • Account Type : Other Expense
  • GST Category : 10. Non-reportable Payments
  • From the  Balance Sheet Link  drop down menu, select the Liability Account you have just created in Step 1 (eg. 701.01 - JD Tractor Loan Account)
• Click on the  OK  button to save.

Step 4: Setup an Asset Account

• Still in  Chart .
• Click on the  Asset  tab. (See if there is an existing Plant & Equipment account.) 
• Click on the  Add or Edit   button.
• Add your  Asset  account details:
  
  • Account Code :410
  • Description : Plant & Equipment
  • Account Type : Asset
  • GST Category :08. Capital Acquisitions
• Click on the  OK  button to save.

Step 5: Setup another Other Expense Account

• Still in  Chart .
• Click on the Expenses tab. (Scroll down and see if there is an existing Purchase of assets account.)
• Click on the  Add  button.
• Add your  Other Expense  account details:
  
  • Account Code : e.g. 190.01 (For this example we have added a sub-account to the existing 190 Purchase - Plant & Equipment)
  • Tick the  Sub-Account of  check box.
  • Sub-Account of : 190 Purchase - Plant & Equipment
  • Description : e.g. Tractors
  • Account Type : Other Expense
  • GST Category : 08. Capital Acquisitions
  • From the  Register Link  dropdown menu, select  Fixed Assets . (This will provide direct access to the Fixed Asset register from data entry screens.)
  • From the  Balance Sheet Link  drop down menu, select the Asset Account you have just created in Step 4 (eg. 410 Plant & Equipment)
• Click on the  OK  button to save.
• Click on the  Close  to exit Chart.

Step 6: Setup an Interest expense account

1. Still in Chart
   
2. Click on the Expense tab. (Scroll down to see if there is an Interest account)
   
3. For this example, we have created an Interest on Loans expense account and then created a separate sub-account for the tractor loan interest
   
4. Click on the Add button
   

Step 7: Cashbook entry to record purchase of asset via a loan. (and add asset to Fixed Asset Register.)

• Click on  Cashbook  toolbar option.
• Click on the  Add  button.
• Click  Yes  to Confirm message: 'Do you want to enter transactions for "Farm Management Account", in company file "Company ABC"?'
• The transaction  Type  is  Cash Journal .
  

• Click on   the   F  button to enter the Fixed Asset Register.
• Click on the  Add  button.
• Enter asset details.
  

Note:

1. Click on the New Asset radial dial.
   
2. Original Cost - net of any GST.
   
3. Purchased From - select from drop-down list of suppliers or enter new name.
   
4. Value for depreciation - this will normally be the same as the cost of the asset.
   
5. Date for depreciation - i.e. date from which depreciation is calculated - this will normally be the same as the purchase date
   
6. Depreciation Details - Depreciation Details such as (Depreciation) Rate%, Private Use% and Method of Depreciation - Diminishing Value and Prime Cost. - these should be entered after advice from your accountant.
   

• Click on the  OK  button to save details to Fixed Asset Register.
• Click on the  OK  button to save the Cashbook transaction.
  

Step 8: Add a Cashbook transaction to record a loan repayment

• Loan repayments can have two parts:
  
  • The  principal  - the amount you borrow to buy an asset
  • The  interest  - what you are charged by the lender for borrowing the principal
• Most borrowers arrange to repay the loan in full over time. This means their repayments pay the principal and the interest. (see example of Cashbook repayment transaction below)
  
• Click on the  Cashbook  icon on toolbar
• Click on the  Add  button
• The Transaction  Type  is  Payment

• Click on  Reports  >  Accounting Detail  > Trial balance  menu option.
• Select the  Report as at  date.
• Click on the  Print  button.
• Scroll down to the  Liabilities  section of the Trial Balance .
• See credit balance of your loan.