Due To Due From
Hello, I have 2 companies with frequent inter-company transactions ranging from payments to vendors to xfers to cover payroll. Company A has both a Due to and Due From accnt for Company B and vice versa. I have been told that this is unnecessary and that I only need a Due To account and am able to record all transactions between the two companies under the Due To. Is this correct?
Answers:
It isn't necessary to have both, but if you prefer to see them separated out like this it is fine. That is just an accounting preference. It is more important to make sure the Due to Company B on Company A matches the Due from CompanyA on Company B. The mistake with most inter-company loans is that a transaction is only recorded on one set of books and a deduction or revenue is missed.
Stephanie Adams
Each company should have both a Due To and a Due From account to properly track intercompany transactions. When Company A pays for Company B, it records a Due From B (asset), and Company B records a Due To A (liability).
Using both accounts ensures the books mirror each other and stay balanced — relying on just one can cause confusion and reconciliation issues.
Nyquaise Moteng
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