Newbie How-To Questions on Credit Cards & Vendors and Cost-Centres
ajswest at mindspring.com
Thu Oct 12 22:45:35 EDT 2006
On Thu, Oct 12, 2006 at 01:16:30PM +0100, Peter C. Pugh wrote:
> 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. ...
> 1. You go to a supplier and purchase an item. The Supplier is
> defined as a Vendor in GNUCash.
> 2. You enter the purchase against the appropriate Vendor and record a
> payment which is settled through a Credit Card.
> 3. The Vendors transaction goes to the associated Expense account and
> as a Credit Card Liability.
> 4. You then get the Credit Card statement with the charge showing for
> the purchase.
> 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.
I don't think you need to use a Vendor for this. In GNUcash a Vendor
is someone you have an account with that bills you for the expenses
that you'll pay in the future. You simply need a vendor (note the
lowercase) which would be entered like any other transaction in the
credit card register.
> 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 only use the Vendor stage for things that you don't actually
pay right away. For example, my telephone bill is automatically
charged to my credit card every month (love those reward miles!!). So
they issue an invoice dated October 18 with a due date of Nov 10. I
enter an invoice for the phone company Vendor with a post and
transaction date of October 18 and note the due date of Nov 10. This
invoice records the expense portion of the transaction while creating
a liabilitiy that I'll pay in the future. Then the phone company
charges the bill to my credit card usually about 2 days before the due
date. So I make a Payment on the Vendor's invoice on Nov 8
(Business-->Pay Bill) and use the credit card account as the paying
account. This transfers the liability from one account (A/P) to
another (credit card). Finally at some point I payu the credit card
bill. This is a very complicated but very accurate way of
accounting. But its NOT what I would do if I went to the office supply
store to buy more envelopes.
In that case I would just enter a transaction in the credit card
register directly as you would for a check written from a checking
account. The information you refer to below is all there, description,
expense account etc. I'm not sure what else you need there.
> 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 ..
> Is there any other way to record a Cost-Centre type structure or Cost-
> Centre type information?
> 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.
you can run reports that sort by Description (that would detail the
place the expense was incurred) and by Expense Account.
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