home: monthly debit return and adjustment

John Ralls jralls at ceridwen.us
Mon Jul 7 14:48:12 EDT 2014


On Jul 7, 2014, at 8:29 PM, Rodrigo Gonçalves <romadryn at yahoo.com> wrote:

> (I'm not from USA so please bear with me if the banking system is different.)
> 
> I use an account for for my personal-home system. At the end of each month, my bank returns 5% of of the money I spent using my debit card (this is to encourage people to use the debit card, I assume).Let's call this "Debit return".
> 
> Also, at the end of each month my account is sometimes credited, sometimes charged some cents in concept of "adjustment interests"or something like that (no idea what this is, but I don't pay attention because it always a few cents). Let's call this "bank adjustment".
> 
> Therefore each month my bank account is credited with the "Debit return" and credited or charged with the "bank adjustment". 
> 
> The "debit return" is not really an income, it is rather a return from a group of expenses (ie the monthly expenses paid by debit card).
> The "bank adjustment" may be an income and it may also be an expense,right? or should I say it could be a positive or negative expense?
> 
> 
> How to set these up?
> 
> For the "bank adjustment" I was thinking on an account eg "Bank monthly adjustment" which is an expense. It could take negative values (ie money enters my account) or positive values (ie money is charged from my account, therefore a real expense). Does this sound OK?
> 
> About the "debit return", I have no clue how to set it up, any ideas?

How you treat that depends on your country's tax laws. If it's not taxable, you can record it as a reduction in expenses, which you could painstakingly distribute to each expense item that you paid with your debit card. This will produce the best accuracy, because it's reducing your expense allocation correctly. OTOH, it's a pain to do, so you could create an expense account called "rebates" and book the whole amount as a negative expense. That will reduce your overall expenses appropriately, but the proportions of your spending will be distorted by the rebates. You could also book it as non-taxable income, though that might distort your cost accounting even more.

If your tax laws say that that third-party rebates are taxable, then you'd need to book them as income so that your tax calculations are correct.

Regards,
John Ralls




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