The heart of this question is "is a journal entry that debits one account and credits another the same as a transfer?". However, I'll describe the confusion I had to ask the question:
This is all about the very first transaction in my business. Bank transaction number one was a deposit of £1000 into the newly-opened business bank account as a "director's loan". Following the web page on how to record a loan in Quickbooks, I have a new entry in my "chart of accounts" for "director's startup loan", and I'm happy with that. However, I've seen THREE ways to record that money being there, and they are:
1) In a video about learning booking with Quickbooks that didn't include automatic bank transaction importing, I was shown how to create a new bank deposit entry. In that entry, the account (in my case "director's startup loan") can be specified as where this money is allocated.
2) When my Quickbooks detects the bank transaction and asks me to "categorise" it, I have the option of saying it is a transfer to the "director's startup loan" account. This makes me wonder how this differs from a bank deposit entry, which I can create with the +New but such entries are not options on the "categorise your bank transactions" page.
3) The web page about recording loans says to create a journal entry, taking money from the bank account and putting it in the "director's startup loan" account using a debit and credit. While I could just follow that advice blindly, I feel I'm not going to understand what I'm doing until I've asked these questions.
So these are three ways of saying "that money that's in the bank account is to be allocated to this director's loan", and they all seem quite different. When is a bank deposit that names an account like a bank transaction classified as a transfer, and when it is like a journal entry that goes from the bank account to the relevant loan account?
Once I've finally got my very first transaction sorted, I hope things will get easier. :)
Glen
