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Posted by S.M. Serba on December 12, 2007, 11:28 pm
Please log in for more thread options You are actually better to set up the VISA as a Credit Card. This will
allow you to go to the Banking menu (centre or drop down) and enter
Credit Card Charges like cheques and to use the Reconcile function the
same way as the bank accounts.
You *can* change the VISA from Liability to Credit Card. But then you
can't change it to anything else (but why would you?).
Stephanie
wrote:
>
> >I need to enter my first company credit card purchase
> > and discovered that I need to set up an account for
> > the credit card. I understand the entries as follows:
>
> > When I enter the liability to the credit card company for the
> > purchases:
>
> > 1. Cr. Credit Card, Visa $100
> > Dr. Purchases $100
>
> > When I pay credit card liability
>
> > 2. Cr. Bank $100
> > Dr. Credit Card, Visa $100
>
> > My question is where is the proper place to set
> > up the credit card account?
>
> As a current liability.
>
> > Is it under current liabilities?
>
> Yes.
>
> > And what is it called usually? Just Credit Card - Visa?
>
> That'll work. If you have more than one card for the business, consider
> setting up one account for each.
>
> > I am using an older accounting software so it doesn't automatically
> > let you choose "pay by credit card", so I have to set this up myself.
>
> You may find you'll have to do a lot more journal entries.
>
> This account will need to be reconciled each month, same as you do for a
> bank account, to record all transactions in and out of the card balance.
>
> You'll have to decide how much effort you want to put into accounting for
> the charges made. It may be easier to record the transactions from the
> bankcard statement instead of trying to post each purchase throughout the
> month. Invariably you'll miss purchases, if you carry a balance you'll
> have interest to record, etc and so on. If the financials are for your use
> only, you will probably have a pretty good idea what your charge card
> balance is at any given moment without having to rely on the number in the
> software.
>
> --
> Paul A. Thomas, CPA
> Athens, Georgia
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