Entering opening balance for credit card account

mitch4 · ‎December 06, 2018

I recently took my first Financial Accounting and (separate) Quickbooks course at a local college.

I decided to try and use QB 2014 Pro to manage my personal finances, fully realizing the pros and cons of doing so vs. Quicken.

I want to start managing my Visa credit card and recording transactions for it.

My original thought, based on reading online and watching Youtube videos about same, was to enter my opening balance as the last day on my last statement, then I would simply start entering transactions to "catch up". Then, at some point (next statement?) I would perform the reconciliation process.

The thing that made me hold off was a comment on the official QB support that said something like:

"enter the start date from the credit card statement *before* your company start date"... (I cannot find this exactly online now).

Well, my "start date", as far as I can understand from reading online, is really just the first transaction I entered, which was the opening balance for my checking acct on 10/21/13.

My current VISA stmt is from 10/25.

Is there any reason I simply cannot enter that date and balance as my opening balance for that account, and then start entering transactions? I obviously do not want to go back a whole month to enter all of those transactions!

To sum up:
1. Can I use my Visa statement starting balance date as the ending date from my last statement on 10/25/13, even though that is *past* my company start date?

qbteachmt · ‎December 07, 2018

Let's review the Purpose: using the credit card to make purchases is a Cash Basis event. The date you made that purchase, you took a micro-loan from VISA. This puts you more into Debt with VISA. The CC account is a Liability type of account. So, the individual Charge Entries are Expense to report. If they are from a prior tax year, you would not enter them again in the current cycle. As you know, then, having Debt decreases your Equity. So, the first charge for the "transition date" or Start Date of your data, for an overlapping debt balance owed, is Enter Credit Card Charge and the expense reason is Owner Equity or Retained Earnings = from last year.

From here, on, you enter for this fiscal year the spending details. These increase what your owe on that card, but you have the individual Purchase names and dates.

And the statement is used to reconcile. Never allow QB to make a Bill; there is no Bill for this. That would be hiding CC liability in AP liability. The Payment to the card company, in Check entry, is going to show only the CC account, to show you paid against that debt balance.

A Common mistake is to treat the Account Statement as a bill; you never bought anything from VISA or AMEX and not on that one date. The reason you don't use a Bill to pay CC listing only the CC account, is that the Bill is treated as paying the CC account in full, which may not match what you actual pay each cycle, making it impossible to reconcile to the Card Statement and affecting the Cash vs Accrual basis reporting accuracy.

View solution in original post

kko · ‎December 06, 2018

Yes. Use the ending balance of your September statement as your opening balance.

qbteachmt · ‎December 07, 2018

Let's review the Purpose: using the credit card to make purchases is a Cash Basis event. The date you made that purchase, you took a micro-loan from VISA. This puts you more into Debt with VISA. The CC account is a Liability type of account. So, the individual Charge Entries are Expense to report. If they are from a prior tax year, you would not enter them again in the current cycle. As you know, then, having Debt decreases your Equity. So, the first charge for the "transition date" or Start Date of your data, for an overlapping debt balance owed, is Enter Credit Card Charge and the expense reason is Owner Equity or Retained Earnings = from last year.

From here, on, you enter for this fiscal year the spending details. These increase what your owe on that card, but you have the individual Purchase names and dates.

And the statement is used to reconcile. Never allow QB to make a Bill; there is no Bill for this. That would be hiding CC liability in AP liability. The Payment to the card company, in Check entry, is going to show only the CC account, to show you paid against that debt balance.

A Common mistake is to treat the Account Statement as a bill; you never bought anything from VISA or AMEX and not on that one date. The reason you don't use a Bill to pay CC listing only the CC account, is that the Bill is treated as paying the CC account in full, which may not match what you actual pay each cycle, making it impossible to reconcile to the Card Statement and affecting the Cash vs Accrual basis reporting accuracy.

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Entering opening balance for credit card account