Credit Card Q&A In QuickBooks

Sometimes new end users of QuickBooks have inquiries about how credit score card perform in the software. Here are some valuable bites of info about this subject.

Aren’t Credit score Cards Expense Accounts?

No. In the Chart of Accounts, liability accounts represent quantities of income owed to other people. Credit score cards are liability accounts, since each time we use our credit score cards, we owe funds to the credit score card business. One nice function of QuickBooks is that it permits us to set up a specific variety of account for credit score cards, named, not remarkably, “Credit Card.”

But make no error: this variety of account is a liability, and not an cost. When you get one thing with a credit card, you are paying for it with borrowed cash, and the cash is borrowed from the credit score card organization. This is why credit score cards are regarded as liability accounts.

So When Are Bills Recorded?

When using the credit score card, the expense is recorded in the Record Credit Card Costs screen, in the decrease half of the screen, in the Bills tab. Let us say you went to Workplace Depot and bought some laptop paper with your credit card. Two issues happened when you did this:

1. You incurred an expense for Office Supplies

2. You went into financial debt to the credit score card business

When using the Enter Credit score Card Costs display, both of these events are recorded on a single screen.

How Does This Relate to Double Entry Accounting?

This above transaction is an exceptional instance of double entry accounting. Keep in mind this and it will assist you a good deal in QuickBooks: every transaction in QuickBooks is double entry – it records two activities with a single transaction. If you grasp this, and realize what these two activities are in each and every screen, it will preserve you a lot of time and trouble in the extended run.

Credit score Card Consumers, Credit Card Accounts. . . How to Set Up in QuickBooks?

Even if you have multiple credit card end users for a primary account, my suggestion is to have a single account set up in QuickBooks for all consumers. An choice is to set up sub-accounts under a parent account, one sub-account for every credit score card consumer. But I think the single account will be less complicated to handle.

The only cause to set up sub accounts is for some internal, management purpose – do you truly need to track the separate liability balances and bills by credit card consumer? How useful will that details be? The further operate to preserve track of it this way requirements to be offset by the usefulness of the data.

Preserve in thoughts, also, that three separate payments will need to have to be paid for every single of the separate sub-accounts – this will make sure that the liability balances in QB will keep correct. My suggestion is to preserve lifestyle straightforward and only use a single credit score card liability account in this circumstance.

2 Responses to “Credit Card Q&A In QuickBooks”

  1. Junior 2 March 2013 at 8:53 pm Permalink

    My credit rating is 616 and that i make 40000.00 annually. My spouse has excellent credit but makes about 25000.00 annually? Can i stop us from obtaining a decent mortgage loan?

  2. Seth 4 June 2013 at 9:17 am Permalink

    my credit rating is low way low which is because of charge cards… im looking to get financing, but nobody will lend because of my score, how do i raise up?

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