Due-to/Due-From Vs. Transfer Accounts

Have you ever wondered whether you should use a Due-to/Due-from account or a Transfer account?  Well, that I cannot tell you.  However, what I can tell you is the difference between the two account types so that you can make a decision as to which one to use.

Due-to/Due-from accounts are similar to liability accounts in that they maintain a balance at the end of the year that is carried forward to the next year.  Therefore, Due-to/Due-from accounts appear on your Balance Sheet.  This account type is usually used for transferring money between companies.

Transfer accounts, on the other hand, are similar to an expense account whose balance is closed into the fund balance account at the end of the year.  Therefore, Transfer accounts appear on your Income Statement.  This account type is usually used for balancing transactions across funds.

So, still not sure which type to use?  I suggest you speak with a CPA for an answer to that question.