How do Credit Card charges show up as expenses on the P&L when you have the CC set up as a liability account?

it is true that a CC is a liability, but QB has a special type account called a CC type - use that

then when you pay for something, you use the expense screen and set the pay from account to the CC account and that logs the CC purchase to the expense account you chose

you pay the CC from the bank and use the CC account as the expense (reason) for the check

Sorry, they are set up as credit card accounts. 

@Tracey Inglimo 

If you're using the Banking tab for your bank account, you should also be using the Bank connect feature the same way for your Credit Card account. Once you're connected it should download credit card transactions as well. And then you will need to categorize the accounts for the expense items. It seems like you're posting the payment side only.

In case, you're not using the Banking tab feature (or bank feed), then you will need to manually enter credit card expenses (+ New > Expense > Payment account = Credit Card account) directly from the statement and then reconcile the credit card account.

Hope this helps!

Yes, I am using the bank fee for credit card accounts. I'm just trying to figure out how/if those expenses end up in the profit and loss statement in order to include them in the tax year. 

@Tracey Inglimo 

If you're using the bank feed for the Credit Card account, you will also need to categorize for expense items (not just payment transfer from the bank account). Once you categorize the expense items for downloaded transactions, it will show up on the Profit and Loss Statement. It can't be simpler than that. So, what's missing here? 

FYI: QuickBooks will download transactions. You will still need to review the downloaded transactions, categorize to proper accounts/select payee and ADD. Once, you will ADD it, it will be in the bank register. It means it will also up in Profit and Loss statement if they're income and expense transactions. It can also create RULES to save time.

What do you mean by "Categorize"? Is there something I need to log in and do every time I use our business credit card? That seems unwieldy.

Categorize just means assigning the transactions to the proper expense category. As you know QBO will assign them to the where it thinks they belong, and you can always create rules as well.

I am having the same issue as you with the CC transactions and the P&L. The transactions I have categorized are actually being deducted from the total expenses in the P&L for categories like Office Expenses and Cost of Goods Sold. It's the opposite of what I need to happen and I am at a loss as to how to fix it.

Hi @casschiro1,

Before we can accomplish your goal for today, may I ask for more details about your inquiry? Saying your transactions are assigned to an incorrect expense account, may I know the name of your credit card company?

Keep me updated in the comments below. Hope to hear from you soon. Take care and stay safe!

Hello,

I'm joining in here with what I believe is a related question.

We've been manually entering credit card transactions with the date of payment as the date when those transactions all hit the Profit & Loss statement.

I am trying to set up our credit cards on QB desktop (Accountant). The transactions come through dated on the date of purchase, of course, and they are all paid on a different date. Using this method, when will the transactions hit the Profit & Loss statement?

Thanks,

Amy

Thank you for joining the thread, Amy.

Knowing how your purchases are reported will help you manage your books. I'll share information as to when credit card purchases are reported in your Profit and Loss statement.

QuickBooks will report credit card purchases in Profit and Loss based on their transaction dates because the expenses are considered realized at these times.

For comparison, a bill is reported in the P&L based on the accounting method. On a Cash basis, the expense is realized on the day it is paid, while on an Accrual basis, the expense is considered realized on the bill date whether it's paid or not. You can find more information in this article: Differentiate Cash and Accrual basis.

It's better to seek advice from accounting professionals for an in-depth explanation of how expenses are captured on financial statements. They are more capable of explaining the accounting side of your transactions.

If you find that your income and expense transactions are missing from your profit and loss report, there are a few things you can do to troubleshoot this issue. I've added this reference for more information: Why are my income and expense transactions missing from my Profit and Loss report?

I've also added this article as your guide in customizing a report: Modify report.

I'll be around whenever you need help about managing your QuickBooks account.

Going back to the original question, I don't believe it was answered.  Taking a look at my transactions, I think I have an answer... although I don't quite understand it.

I thought I understood the difference between CASH accounting and ACCRUAL accounting.  When reporting in accrual, my credit card purchases will show up on the P&L based on the date of the purchase.  When reporting in cash, the transactions that were paid for that period should show up on the P&L - even if they were purchased on the credit card in an earlier period.

So the original question was, how does QBO decide to categorize a credit card payment - like a partial payment that doesn't pay off the card when it has a large balance.  On the cash report, does the payment get applied to the oldest purchases that haven't yet been paid for?  I think this was the original question - and mine.

But I sort of answered my own question by studying the transactions on my P&L Detail report.

The credit card purchases show up on the date they were purchased with the credit card (accrual) on both the cash and accrual reports.  The interest charged to me also shows up the same way (accrual) on both reports.  And, I suppose because QBO treats credit card purchases this way, the credit card payment does not show up on either report.

This doesn't seem like it is very exact when using CASH accounting.  If I have a $10k credit card balance that I've been holding for 6 months, and I generally charge $500 in purchases a month to the card, and then I pay off $5000 of the principal in one month.  The only thing that shows up on my cash P&L is the $500 in purchases - - - although in the long haul, I guess it will all add up correctly.

Anyone have an explanation?

I appreciate you for taking the time to write your concern here, davekerrarch. Let me share and elaborate on a few things about accrual and cash accounting. 

The main difference between cash accounting and accrual accounting is in the timing of when revenue and expenses are recognized. Cash accounting records transactions when cash is received or paid out, while accrual accounting records transactions when they are earned or incurred.

You can read through this article for additional information: Choose between cash and accrual accounting methods in QuickBooks Online

Also, a credit card is a liability. Once paid, it's already an expense depending on how it's paid though. In QuickBooks Online, there are multiple ways how you can record payments so you can keep track of your expenses and maintain accurate financial reports.

If you made a credit card payment using a check, you can record it in QuickBooks by creating a check. You can also record the payment by transferring the record if the CC and the bank account you use to pay the credit card expense are connected in the bank feeds.

To learn more about the details and process, check out this link: Record your payments to credit cards in QuickBooks Online.

I'm adding these articles that can help you in your tasks when running a Profit and Loss report: 

• Unapplied cash payment income on your profit and loss 
• What to do if you see unapplied cash bill payment expense on your profit and loss

If you have further questions about managing your QuickBooks account, don't hesitate to leave a reply. The Community team will be glad to help. Take care.