How do you record a loan from the owner or a bank loan in QuickBooks Online?

• A. Record a customer refund.
• B. Create a liability account and ignore cash movement.
• C. Create a Journal Entry or deposit to cash and credit the liability or equity account; ensure double-entry increases cash and records liability/equity.
• D. Record as an expense.

Answer: (C)

The financing event changes two things at once: cash on hand goes up, and there is a claim against someone (a liability) or an increase in the owner’s stake (equity). QuickBooks Online uses double-entry, so the correct way to record a loan is to have you increase cash and also increase a liability or an equity account with a credit.

You can do this by a journal entry or by depositing the loan proceeds into your bank account and crediting the appropriate account. For a bank loan, you typically debit Cash and credit a liability account such as Loan Payable. For an owner loan, you would credit a liability account (if you’re recording what you owe the owner) or, if the funds are treated as an owner’s equity contribution, credit an equity account like Owner’s Equity. The important point is that you reflect both sides—cash increases and the corresponding liability or equity increases—rather than treating it as an expense or ignoring the cash movement.