Aakvatech Limited - Staff Loan Accounting

What each account means in your setup

From Staff Loan Type:

• loan_account = “Loan Account” This is the asset/receivable account that holds the outstanding balance owed by the employee.

• disbursement_account = “Disbursement Account” This is the funding source account used when you pay out the loan (typically Bank or Cash).

• payment_account = “Repayment Account” This is the account used when the employee repays (often Bank, Cash, or a payroll/loan repayment clearing account).

Therefore, for the disbursement journal entry function

Your function’s logic is:

• Debit debit_account (with party = employee)
• Credit credit_account (no party)

For a loan disbursement, the correct accounting is:

• Dr Loan Receivable (employee loan) → increases the amount the employee owes
• Cr Bank/Cash (funds paid out) → decreases cash/bank

Correct mapping

• Debit account (debit_account) should be: loan_type.loan_account
• Credit account (credit_account) should be: loan_type.disbursement_account

Direct answer in your requested terms

• Disbursement account (from Loan Type): disbursement_account Posting side in JE: CREDIT

• Loan account (from Loan Type): loan_account Posting side in JE: DEBIT (and party-linked to the employee)

Where payment_account fits

payment_account should be used in the repayment entry, not in the disbursement entry. Typically repayment would look like:

• Dr payment_account (money received / payroll clearing)
• Cr loan_account (reduces receivable)