[GNC] liability or expense

[Stephen M. Butler]

On 08/06/2018 02:27 PM, Adrien Monteleone wrote:
> Certainly, if you have a card tied to the account and you are charged for each purchase on the spot, then no need for the mess I described.
>
> When you purchase:
>
> Dr. Expenses:Entertainment (software, whatever)
> Cr. Credit Card (the one that will be charged)
>
> Use ‘Google Play’ as the Description for the transaction and the actual title purchased as either the Note or the Memo on the expense split.
>
> When entering expenses, I generally use the Description field for the ‘Vendor’ being paid. (who I purchased from)
>
> Otherwise, when you pay the credit card bill, that’s like any other situation, as Google Play is no longer part of the equation as Stephen noted.
>
> Regards,
> Adrien

That's the "fun" side of accounting.  So many ways to do the same
thing.  Only your CPA knows for sure how you should do it -- and that's
because it will be how s/he wants it done.

>
>> On Aug 6, 2018, at 4:20 PM, Stephen M. Butler <kg7je at arrl.net> wrote:
>>
>> On 08/06/2018 01:59 PM, Baldero Mendoza wrote:
>>> Please be patient with me - brand new to this.
>>>
>>> Household financial stuff. I want to post a "google play" purchase.
>>> Should I post as an expense or a liability?
>>>
>>> I have accounts open for things like "electricity" and that seems to
>>> work just fine, but "google play" looks like it works sort of like a
>>> credit card, so I listed it under  "liabilities", and that seems to
>>> work too. I made the connected account "checking" and it all seems to
>>> balance and work.
>>>
>>> However, what bothers me is that the "google play" entry under
>>> "liabilities" is listed as a red negative number. So I have two red
>>> negative numbers listed now, one under "liabilities" and one under
>>> "google play". Everything balances, so is it okay or should I place
>>> "google play" purchases as "expenses"? (I just started gnucash so
>>> there aren't any credit card or debit card purchases yet.) The
>>> "expenses" stuff gets listed as black positive numbers even though
>>> they're an outflow of money just like the "google play" stuff under
>>> "liabilities". Maybe it's optional and can be done either way?
>>> Confusing.
>>>
>>> Thank you everybody!
>>> _______________________________________________
>> All  of us were brand new at one point.  I'm not much past that stage
>> either.
>>
>> I'm not a CPA nor a book-keeper (though am married to an accountant and
>> have written accounting software), so this is just my opinion.
>>
>> 1.  I would make an expense category for "Software" rather than tying it
>> to "Google Play" -- but that's just my approach.  Would make it an
>> expense though.
>>
>> 2.  The Google Play items (at least some of mine) get charged off to
>> your credit card.  That would be a Liability account (short-term).
>>
>> 3.  So, the two sides for the transaction (purchase) would be the
>> expense (Software or Google Play) and CreditCardClearingAccount (Liability).
>>
>> 4.  When you pay off the credit card, the transaction would be the
>> CreditCardClearingAccount (to reduce toward zero) and the Checking
>> Account (Asset) from which the payment was made.
>>
>> Hope this helps clarify your thinking.
>> -- 
>> Stephen M Butler, PMP, PSM
>> Stephen.M.Butler51 at gmail.com
>> kg7je at arrl.net
>> 253-350-0166
>> -------------------------------------------
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