[GNC] Recording transactions (date)

[Michael or Penny Novack]

That's not the difference. I understand you are using the credit card as 
a "30 day net" account with each vendor (I also do that) but for 
accounting purposes it's not the same as if each vendor were giving you 
a 30 day net invoice (and the bank just bundling these for a single 
payment of all such outstanding).

Yes "cash basis" is differing from "accrual basis" just by timing but 
the "cash" in "cash basis" does not refer to physical money. When you 
paid the vendor with a credit card you no longer have  a liability with 
that vendor (so record the expense then). When you later pay the credit 
card balance that was not an expense but a transfer between assets and 
liability.

How you date the expenses (paid by credit card) cannot depend on how you 
pay the credit card company. Cannot depend on that you paid the "new 
purchases" balance in full. Using your example, suppose in some month 
you were unable to pay that entire balance in full, just paid half of 
it. Do you propose booking each of the constituent expenses as one half 
the amount? << leaving the other half till when you eventually pay down 
that part of the outstanding credit card debt >>

Michael D Novack



On 4/9/2024 9:42 AM, Stan Brown (using GC 4.14) wrote:
> On 2024-04-09 01:19, David Carlson wrote:
>> Nearly every time [the bank's] list doesn't match my list, the
>> difference is precisely the difference between when I wrote the check or
>> when I initiated a payment online or when I swiped a card and when they
>> posted the transaction to my account.  That is what we users often consider
>> to be the difference between accrual basis vs cash basis.
> I must respectfully disagree. That difference is simply timing. It can
> occur whether you are on a cash basis or an accrual basis, but in itself
> it is not a difference between cash and accrual basis.
>
> The chief difference between cash basis and accrual basis, for a person
> as opposed to a business, is whether you record money you owe but
> haven't paid (liabilities) and money owed to you but not yet received
> (assets).
>
> For example, suppose you have a credit card, and to avoid paying finance
> charge you chose to have your bank automatically pay the latest
> statement balance on the payment due date. How is a restaurant dinner
> recorded when you pay by credit card?
>
> On cash basis, it's not an expense until it's paid. Therefore, _nothing_
> is recorded until the payment date after the statement date after the
> meal. Then you record
> 	Dr: Expenses:Restaurant Dining
> 	Cr: Assets:Cash in Bank
> and a similar entry for every charge on that month's credit card statement.
>
> On accrual basis, it's an expense when it's incurred. You make this
> entry when the meal happens:
> 	Dr: Expenses:Restaurant Dining
> 	Cr: Liabilities:Credit Card
> and then when the payment happens, you make _one_ final entry:
> 	Dr: Liabilities:Credit Card
> 	Cr: Assets:Cash in Bank
>
> Since the payment is automatic, you and the bank will record it as of
> the same date, whether you are on the cash basis or accrual basis.
>
> Stan Brown
> Tehachapi, CA, USA
> https://BrownMath.com
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There is no possibility of social justice on a dead planet except the equality of the grave.