Newbie How-To Questions on Credit Cards & Vendors and Cost-Centres

[Maf. King]

On Thursday 12 October 2006 13:16, Peter C. Pugh wrote:
> Hello,
>
> I have searched Google a number of times to try and find an answer to
> this question.  Sorry if I have overlooked any previous postings.
>
> I am trying to establish how to use Vendors in conjunction with
> Credit Cards.  I.e. ...
>

Hi,

I don't think it works this way - AFAIK, Vendors are "tied" to A/P accounts 
only.  I'll go step by step...

> 1.	You go to a supplier and purchase an item.  The Supplier is
> defined as a Vendor in GNUCash.

Fine, the vendor gives you a bill, which you will pay at some time in the 
future (eg, 30 days etc, but could be payment within "1 second")


> 2.	You enter the purchase against the appropriate Vendor and record a
> payment which is settled through a Credit Card.

You enter the vendor's bill into an Accounts Payable Account

> 3.	The Vendors transaction goes to the associated Expense account and
> as a Credit Card Liability.

The transaction affects Expense accounts and the A/P liability account.

> 4.	You then get the Credit Card statement with the charge showing for
> the purchase.

Fine, but there should be another step, with a transaction to pay the bill 
using the credit card, (CCard->AP)(but I'm not sure you can actually do 
this!)

> 5.	A payment is made to the Credit Card company, although it is late.
> 6.	This ISN'T paid in full in that period -- hence it attracts an
> interest charge in the following period.
> 7.	Subsequently, due to the late payment, there is also an additional
> charge applied by the Credit Card company.
>

That is a different expense.  That isn't you buying widgets from your 
supplier, that is the charge the CCard company make for borrowing money.

> Essentially, what I am trying to understand is the appropriate
> structure that should be in-place to support such a transaction
> scenario.  Should the Credit Card company also be registered as a
> Vendor to reflect the associated Interest and Late Payment charges?
> With Vendors in place, should the Credit Card company's statement be
> settled as a Vendor account, or just as a Credit Card Liability
> account?  Should the original transaction even be processed as a
> Vendor transaction, or straight to the Credit Card account, bypassing
> the Vendor phase entirely?

I would (do) bypass the vendors system unless the vendor issues a bill to be 
paid at some later stage. ( I only use this for my business accounts, not my 
personal accounts)

 Credit cards are still a liability, but they work in a slightly different way 
than A/P and GC reflects this.  I don't use the vendor system for credit 
cards and their charges.  I don't even think that you _can_!

  

>
> An additional question as well please ...
>
> How do you track expenses back to the individual that made the
> purchase?  I.e.  Define a Cost/Profit Centre for each member of the
> organisation who may be making purchases or settling accounts?
> Currently I use a structure like ..
>
> Expense
>
>      |---Miscellaneous
>      |
>                |---CC-1
>                |---CC-2
>                |---etc.
>      |
>      |---etc.
>
> Is there any other way to record a Cost-Centre type structure or Cost-
> Centre type information?
>

I use the following structure:

Liabilities: |
	|---Employee1
	|---Employee2
This tracks what each employee has charged to their expenses, and how much is 
owed to them.  I don't know (directly) how many widgets have been bought by 
whom. 

> For your information, I am using GNUCash 2.0.1 on a MacBook Pro.  I
> am using it for personal and small business (sole trader) accounts.
> The reason I am wanting to use Vendors is so that I can track not
> just the nature of each transaction -- the expense type -- but also
> the places that the expenses are incurred.  As well as that, I often
> work on a project basis, and need to be able to relate some expenses
> back to a client  for billing purposes.

Employee Expense vouchers may be your friend here, I don't use them, but have 
a look and see if they can be made to fit your needs.

HTH,
Maf.