If a shareholder has borrowed money from a company and is expected to pay it back within 9 months, how would the amount be reported on the balance sheet?

Question

Quizplus · Accepted Answer

The amount borrowed from the company by the shareholder is a loan receivable and should be reported in the current assets section of the balance sheet since it is expected to be repaid within the next 9 months. Option A is incorrect since accounts receivable refers to amounts owed to the company by customers. Option C is also incorrect since a loan receivable from a shareholder is not considered part of shareholders' equity. Option D is incorrect since retained earnings is a component of shareholders' equity and is not used to show loans issued by the company to its shareholders.

If a Shareholder Has Borrowed Money from a Company and Is