Accounting & Bookkeeping & Small Business Forum

[Guest]

How should I register transactions when I am bought some stuff (accounting course, software) using personal credit card. I want to record the Universal Accounting course (I bought it and I need to pay for it on 18 months period). Should it be Owners Equity CR and Education Expensess DR? Or Account Payable CR and Education Exp. DR. And when I am going to paid it off how should I record it.

[Guest]

Depends on your job/business. If you are an employee and the course is used for BENEFIT OF CURRENT POSITION, IT WILL BE ANITEMIZED DEDUCTION ON SCH A
If it does NOT benefit your current position IT IS NOT DEDUCTIBLE AND NO ENTRY IS NEEDED

If you were self employed as a bookkeeper/accountant BEFORE taking the course I would dr education expense and cr credit card payable one of the rules of accounting is that the BUSINESS IS SEPARATE FROM THE INDIVIDUAL. GET A CREDIT CARD FOR BUSINESS USE ONLY.

If you JUST STARTED SELF EMPLOYMENT AS A BOOKKEEPER/ACCOUNTANT, the course would be considered startup expense(other asset) and AMORTIZED OVER 60 MONTHS

[Guest]

(Richard,) As an addition to this question, I have a customer who contributes a large part of his inventory and supplies by use of a personal credit card. He also pays expenses for the business directly from personal cash. I've discussed with him about obtaining a business credit card and opening a business checking account. In the meantime, the manner in which I've accounted for these transactions is a credit to Owner's Investment and a debit to whatever expense or asset account the expenditure increases. Payment of the credit card balance then remains as a personal expense. Is this incorrect?