gnu-cash - treatment of credit cards

[Maf. King]

On Wednesday 01 October 2008 20:17:13 Chris Faulkner wrote:
> Hi
>
> I have been using GnuCash now for about a month - I just have a
> question (hopefully simple !) about credit card (liability accounts).
> I have simple current, savings accounts and credit card accounts. I
> have current and savings accounts in my assets and credit card in
> liabilities.
>
> If I make a purchase on my credit card, I have entered this as a
> "decrease" on that account, so the running total reduces. When I make
> a payment to the credit card from my current account, it shows as an
> increase on the credit card account and an increase on the checking
> account. Is this right ? I fear that I am probably entering
> transactions incorrectly.

Hi Chris,

Sounds like you have got all the credit card txns backwards.

When you charge something to your card, you are INCREASING your liability to 
the CCard company.  Likewise, a payment from checking should decrease both 
accounts - you lower your balance, but also lower your liability.

BTW,  my Credit card accounts label the 2 columns "Payment" and "Charge", 
rather than increase/decrease - which seems more intuitive to me.  Maybe you 
have the "account type" set wrongly - there is a type "credit card" (rather 
than liability) for just this thing.

>
> When I do reports, amounts that I have spent on my credit card show as
> negative entries against total worth but amounts that I have spent
> from my current account are shown as positive entries. So does this
> mean that I am entering transactions incorrectly against my current
> account.

Probably.  There is an option in some reports for "Sign Reverse" certain 
accounts - that may be catching you out in this case.

>
> Is it OK to start with negative balances on both current and credit card.
>

If, on the day that your GC records began, you had an overdraft in your 
current account, and had overpaid your most recent credit card bill, then 
both accounts would show as -ve opening balances.

Regards,
Maf.