Is it correct to book my Credit Card charges on the P

Good day, @chelsea-fourstar.

Welcome, and I appreciate you dropping by the Community. I'm here to answer your concern about your credit card charges in QuickBooks Online (QBO).

To ensure that I'm on the same page, are you using a third-party application to import your Home Depo transactions charges to QBO? Also, when you say they're posted to your P, is it an account in your Chart of Accounts? Any additional information will help me provide the best resolution for your concern.

In the meantime, you may visit our website for tips and other resources you can use in the future: QBO self-help articles.

I'll keep an eye on your response. Cheers!

Thank you for reaching out!

I am utilizing the Home Depot platform to automatically import the transactions. 

Each transaction pulls in uncategorized by default, so I was adding each applicable expense category. Ie:

12/15/21 Faucet charge of $53 imported, GL Code is "Uncategorized" - I would change to GL Expense Category "Materials". 

Then I receive my Statement (month end) with a due date of January. I reconcile each of these charges, then create the bill for payment, which is posted in January. 

Because that Faucet Charge was added in December, it's including that Expense in my December financials, even though the payment towards the card wasn't made until January. I believe this is the correct workflow, but want to ensure since my CPA/CFO are wanting it to be Expensed the month I make the payment towards the card. 

So really, wondering if this is the correct workflow for the transaction and reporting, and if there are other methods users prefer. 

Thank you!

Thank you for reaching out!

I am utilizing the Home Depot platform to automatically import the transactions. 

Each transaction pulls in uncategorized by default, so I was adding each applicable expense category. Ie:

12/15/21 Faucet charge of $53 imported, GL Code is "Uncategorized" - I would change to GL Expense Category "Materials". 

Then I receive my Statement (month end) with a due date of January. I reconcile each of these charges, then create the bill for payment, which is posted in January. 

Because that Faucet Charge was added in December, it's including that Expense in my December financials, even though the payment towards the card wasn't made until January. I believe this is the correct workflow, but want to ensure since my CPA/CFO are wanting it to be Expensed the month I make the payment towards the card. 

So really, wondering if this is the correct workflow for the transaction and reporting, and if there are other methods users prefer. 

Thank you!

You're on the right track, chelsea-fourstar.

Yes, you followed the correct workflow on recording transactions in QuickBooks Online.

There are two methods in accounting: Cash and Accrual. Cash accounting displays income and expenses as of the time you receive a payment or pay a bill. On the other hand, Accrual accounting income expenses are shown regardless of whether your customers have paid your invoices or you have paid all of your bills.

Based on your situation, you'll need to pull up your report on a cash basis to ensure the expenses are displayed on the month they are paid.

Here's how:

1. Go to the Reports menu.
2. Type in the report you want to run.
3. Ensure you selected the correct reporting period.
4. In the Accounting method section, select Cash.
5. Once done, hit Run report.

Check out this article as an additional reference: Cash vs. accrual accounting: What’s best for your small business?

In addition, I've added this resource so you'd learn how to filter or format the layout so that the right data appears in the proper spot: Customize reports in QuickBooks Online.

Post a comment if you need further clarifications about the workflow or reporting. I'm always around to provide answers.

Thank you for your response!

I have verified I am pulling my reports in Cash, which is why I'm scratching my head: the card transactions are pulling in the month they were charged to the card. 

Here is an example:

12/25/21, $53 Faucet Purchase on the Home Depot Credit Card. 

I upload this to my Credit Card Register, select my GL Code. 

I then receive the Statement. This charge is included. I reconcile my card, and this $53 is incorporated in that reconciliation. Once reconciled, it creates a bill to be paid towards the Credit Card. 

The $53 bill is added to my Credit Card Payable Liability, once paid, it clears that line. But, this is what I'm seeing:

The $53 Transaction is reported as an expense on my 12/2021 Cash Financials

(Debits Expense, Credits Credit Card Liability)

Once paid, in January, it correctly reduces my Credit Card Liability (Debits Credit Card Liability, Credits Cash)

I am not sure why the CC transaction will show on my 12/21 financials though. I would have assumed it would post the month I reconcile the credit card (January). 

This is why I'm wondering if I have a setting wrong or missing a step!

Thanks again!

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@Giovann_G wrote:

You're on the right track, chelsea-fourstar.

 

Yes, you followed the correct workflow on recording transactions in QuickBooks Online.

 

There are two methods in accounting: Cash and Accrual. Cash accounting displays income and expenses as of the time you receive a payment or pay a bill. On the other hand, Accrual accounting income is shown regardless of whether your customers have paid your invoices, and expenses are shown regardless of whether you have paid all of your bills.

 

Based on your situation, you'll need to pull up your report on a cash basis to ensure the expenses are displayed on the month they are paid.

 

Here's how:

 

1. Go to the Reports menu.
2. Type in the report you want to run.
3. Ensure you selected the correct reporting period.
4. In the Accounting method section, select Cash.
5. Once done, hit Run report.

 

Check out this article as an additional reference: Cash vs. accrual accounting: What’s best for your small business?

 

In addition, I've added this resource to learn how to filter or format the layout how to filter or format the layout so that the right data appears in the proper spot: Customize reports in QuickBooks Online.

 

Post a comment if you need further clarifications about the workflow or reporting. I'm always around to provide answers.

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