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I think I left my thinking cap at the gun range. When a credit card payment is made is it an expense or is it a transfer from checking to CC? The individual charges were never posted as an expense.
The proper way is to record the charges and set up a liability account - then when the payment is made - offset the liability account.
If you're not doing that, then the only way to keep a handle on the account is to charge the expenses directly when paid to the credit card.
The proper way is to record the charges and set up a liability account - then when the payment is made - offset the liability account.
If you're not doing that, then the only way to keep a handle on the account is to charge the expenses directly when paid to the credit card.
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I keep my books on a cash basis, so I treat my credit cards as if it were a bank account;e.g. I debit Supplies and Credit Visa Acct. which I have set up as a current asset. Then when I pay the Visa, I debit the Visa account and credit my bank account. This is not GAAP but it is my own books so I don't plan to give them to anyone to evaluate.
It would work equally well to use Uncle Sam's method and set up a liability account for the credit card even if you are on a cash basis However, my accounting program does not recognize expenses recorded to a liability account until they are paid. Consequently, Accounts Receivable can be recorded without recognizing income if not paid.
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