Accounting question

[Michael DeBusk]

On Jun 26, 2016 18:27, "Ruth Morley" <morley.ruth at gmail.com> wrote:

> Now should I put the rebate amount into the expenses:household or should I
> set up a new income category which is for instance Income:Rebates.

Rebates are generally not taxable income, and I don't consider them to be
income at all. They're more like a discount off the purchase price.

As such, they are (in my opinion) better recorded as a credit to the
expense account.

Rebates and refunds are one of the two situations in which I use accrual
methods in my cash-basis books. I have an asset account of type "accounts
receivable" (a/r) for rebates and refunds I'm due. When I buy an item that
has a rebate, I record the purchase normally (credit the payment account
and debit the expense account) for the full amount, and then I record
another transaction in which I credit the expense account and debit the a/r
account for the amount of the rebate.

(Truth be told, I record the rebate transaction when I mail the rebate
form, but I put the date of purchase in the date field.)

When I actually receive the rebate, I debit cash or checking and credit the
a/r account.

I treat tax refunds the same way, recording them as a/r on December 31 of
the year for which I'm filing.