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Level 1

credit card payments as an expense?

I have recorded and posted all items on the cc statement as expenses to what they were for, however I have also always entered the credit card payment as an expense as well. I got to thinking about it and wanted to be sure I was doing this correctly. If I already entered all items on the statement it seems that entering the cc pmt would be accounting for the expenses twice. 

Any advise?

2 Comments
Anonymous
Not applicable

Re: credit card payments as an expense?

A credit card payment should be recorded as a check using the credit card balance sheet account.  It's basically a transfer of cash from checking to the CC account, similar to a transfer of cash between two bank accounts.

Level 12

Re: credit card payments as an expense?

Exactly what BRC said. Card charges are expense when card is used, even in cash basis accounting. You are borrowing as micro-loans from the cc company. This creates a loan type liability and when you pay the card company all you are doing is paying down loan balance. 

 

If you reconcile the cc account before creating a payment check you will be prompted with an option to create a check at that point, and it can even be to print later. Or you create a check whose detail is the cc account in your COA.

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