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merylsmith: 2 months ago

What tax year do end-of-year credit card charges go in if the bill is paid the following year?

This is an accounting question. This is the scenario:

A.) You charge something on November 20th, 2011.

It shows up on your credit card statement that arrives in December 2011 with a due date of January 14, 2012.

You pay the bill on the due date. The debit from your checking account shows the payment made in 2012.

B.) You charge something on November 20th, 2012.

It shows up on your credit card statement that arrives in December 2012 with a due date of January 14, 20123

You pay the bill on the due date. The debit from your checking account shows the payment made in 2013.

Now you are doing the tax accounting for the tax year 2012. Which items show up in your business expense allocations for accounting purposes? How do you reconcile the moneys going out (expenses) from your checking account with the expense categories of the charges you made for the calendar year?

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Answer 1

MarSch: 2 months ago | Last edited at 9:02AM on 3/7/2013

It would depend on what type accounting system you're using - cash or accrual. If a cash system (which is easiest), amounts aren't put in until they're actually paid, so it would be in the January 2013 taxes.
If you use an accrual system, the bill would be entered into your system (into acct. payables), in December, when the bill comes in (or when the receipt is given to you), and on your records, it would be listed as a liability for 2012.
If you're a larger company, you usually use the accrual system, and a smaller company is on a cash basis. On the accrual, when you actually PAID the bill, it would be debited to the A/P file. On the cash basis, when you actually paid the bill, it would be debited to the expense file...
Hope this helps.

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Answer 2

bikergirl40: 2 months ago

Doesn't matter when the charges are paid .. It only matters when the charges are invoiced.

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