A cash advance to an employee is recorded with a debit to an account such as Advance to Employees or to Other Receivables: Advances. The credit will be to the account Cash. If the cash advance is expected to be repaid within one year, the account Advance to Employees will be a current asset account.
If the cash advance is repaid through payroll withholdings, the amount withheld will be recorded as a credit to Advance to Employees. If the employee gives the company a personal check to repay the advance, the Cash account is debited and the account Advance to Employees is credited.
