 QuickBooks Online 2024. Pay down credit card form. Get ready because we're going to Bookkeeping Cloud 9 with QuickBooks on... First, a word from our sponsor. Yeah, actually, we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But that's okay, whatever, because our merchandise is better than their stupid stuff anyways. Like our, trust me, I'm an accountant product line. Yeah, it's paramount that you let people know that you're an accountant. Because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep, complex and nuanced questions. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Lime. Here we are in our browser searching for QuickBooks Online Test Drive looking for the result that has Intuit.com in the URL. Intuit being the owner of QuickBooks and selecting the United States version of the software verifying that we're not a robot. Open up our major financial statement reports like we do every time. Reports on the left-hand side. We're in the favorites. We're going to right-click on the balance sheet and open Link in New Tab. Same with the profit and loss. Right-click and open the Link in the New Tab. Let's take a look at those tabs. Go into the middle tab up top. Closing up the hamburger, there is our balance sheet. Tabbing to the right, they're closing up the hamburger. There's our profit and loss, otherwise known as the income statement. Going back to the first tab, that's the setup process we do every time. We're going to do our data input on the first tab. Look at the result of that data input on the tabs to the right. Selecting the plus drop-down. We've been looking at the forms for the customer cycle, the vendor cycle. Then jumping over to the other, which isn't actually a cycle. But everything in this section typically represents forms that usually will have an impact on the financial statements. Or at least types of things that we do periodically. They happen on a fairly regular basis. Now we're going to go down to the pay-down credit card. So the pay-down credit card form, you can think of it as basically similar to a transfer form. We have a similar kind of problem. We addressed with the transfer form that being that we have two accounts that are related to financial institutions. Instead, this time of having two checking accounts, like a checking and savings account, we now have usually a checking account and then a credit card account. The credit card account is represented by a liability, but it can still be connected to the banks with that bank feed type transaction. Now you'll recall with the transfer form, why did we use the transfer form? Just to give a premise as to why we might use the pay-down credit card form. The reason is because if you think of taking money out of your checking account and putting it into the savings account, we could record that with an expense or check form. But if we record it with an expense or check form, it'll record the proper journal entry, decrease in the checking account, increase in the savings account. It'll show up as an expense form in the checking account, which makes sense because expenses usually decrease the checking account, expense forms usually decrease the checking account, doesn't necessarily need to go to an expense account because we might be buying an asset, for example. But then when we look at the savings account, we'll have an expense form in the transaction detail that would have been increasing the checking, the savings account, a bank account, and that would look funny if, on the other hand, we said, let's go to the savings account and solve that problem by using a deposit form to record the transaction. I could deposit it into the savings account to record the transfer and record the other side coming from the checking account. That still would record the same transaction, increase to the checking account, and decrease to, I'm sorry, increase to the savings account, decrease to the checking account, but it would show the deposit properly this time in the savings account, but the checking account would have an expense form with a negative amount in it. And that's the purpose of us using a transfer form because the transfer could mean an increase or a decrease. Just a quick recap on that, if I go to my balance sheet here and we go into the checking account, we can see that we have the detail deposits normally will, of course, increase and then expense form, check forms and so on will typically be decreases in order to avoid a situation where we have an expense form that results in an increase to some kind of bank account or to avoid a deposit form that has a decrease, those two things looking funny, that's why we use the transfer form. That'll also help us with our filtering because often we want to filter by transaction type and if I want to see the increases, I would typically want to filter by transaction type and then look at equal to the deposits, right? And so, but I might also have to add the transfers so that the transfers could be either an increase or a decrease if I was to filter it like that, closing it out and now you can see that we have the transfers also representing, are there any transfers? These are all deposits, so we don't have any transfers, but if we had a transfer, it could be an increase or a decrease depending on which way the transfer went. Okay, same kind of thing with the credit card. If I close this out, I go back to the first tab, when we pay the credit card, we most likely would think of I'm paying it out of a checking account, so I'm going to write a check to the credit card company, which is most often still what most people often do and that's pretty much fine, it's not going to be a big problem, it'll look proper on the checking account side because the expense form will be decreasing the checking account and that seems normal, but when we go to the credit card side, it's going to show this expense form in the credit card and oftentimes we use the expense form to record the charges to the credit card because you'll recall in QuickBooks Online, this expense form is the form that we could use and change it from the checking account to pay stuff by paying the credit card, so I could enter my transactions that I normally pay off, like with a check, like the utility bill, the gas bill and whatnot, I might pay it with a credit card and I could use the same expense form to do that, which instead of decreasing the checking account would increase the liability account and so if I close this out, so that means if I also record the decrease or the payment out of the checking account to the credit card account, it's going to show an expense form that's going to be going the other way, so let's check it out just to show you what I mean, if I go into the liability accounts here, we've got our master card, there's our credit card, we could see here that when we purchase things and charge it to the credit card, the form typically used is the expense form, the same form that we use when we buy stuff from the checking account with an electronic transfer, possibly being recorded with the help and use of the bank feeds, but instead of decreasing the checking account here, it's going to be increasing the liability account for the payable of the credit card, so if I go into it, you can see the charge here and instead of going to the checking account, it went to the credit card and then down here, it's charged to a job because we have a job cost system, but if it was purchasing like the telephone expense, it would be going to a normal kind of expense account down here, so you could see that we have these expenses, here's who we purchased it from and we purchased fuel here and dex and this is the account that what's charged to, now it's possible also for us to then enter a bill and then pay off the bill possibly with the credit card, that's what happened here, so if I go into this one, we entered the bill and then when we paid the bill, instead of paying it out of the checking account, we paid it with the credit card and that, so it's a similar kind of process, we're using the same forms that we would in the checking account but recording it on the credit card, that's because they're both like financial institution backed accounts, they could both be connected with the bank feeds to the financial institution, now the only decrease we have down here is this one and it does say it's a description of a monthly payment but they recorded it with a credit card credit, which I don't think is exactly the proper payment but you could see that it's a different type of form, it's not the form that I think is exactly proper because we should be using the pay down credit card form I believe but you could see that a different form is being used as opposed to the expense form which at least shows that it's something different, it's not in here with an expense form, so let me show you what I mean on that, if I exit, if I go to the first tab, hit the drop down, it looks to me like they used this form, credit card credit form which is under the vendors section and I think this form might be more appropriate if you had some kind of credit like a charge back from the credit card company, like they charged you something and then they took it back or something like that, that seems to be the more appropriate use of this rather than the normal payment of the credit card which would be then I would think more useful to use the form designed for that purpose looks to be the pay down credit card form, that's what specifically it's designed to do is to actually make that payment, so again you could use other forms to do these transactions but these forms are designed to differentiate that transaction detail, so let me just show you the problem if we entered an expense form, so you might say okay why don't I just pay down out of the checking account using an expense form, let's take a look at what that looks like, so if I go into here and I say that we're going to pay down the credit card, let's just call it credit card, I just made up a new vendor for credit card, it's going to come out of the checking account and then we're going to pay the visa account, I'm going to put it on there as of the 31st and let's say that we're just going to put the other account to the master card, master card which is our credit card liability account, so you can see it's a liability, now this is not a problem due to the fact that it's a liability account instead of an expense account, the expense form does not mean that we always have to buy expenses with it, that's not the issue because we could have purchased fixed assets which is an asset or inventory down here, the problem is that this transaction type form could get confusing, that's what those other forms are used for even though we end up with a bunch of different forms, so let's put this at just $20 just to practice with, $20, this is going to decrease the checking account and the other side's going to be going to the credit card, let's save it and close it, let's go into our balance sheet, let's refresh it, run it again and hold on a second, I have to increase the date to the 31st, to the 31st, run it and then go into the checking account and then we could see down here that we have $20 decrease, so it's in there with an expense form, it looks normal here because it's a decrease and it's an expense form, so that doesn't look unusual, that wouldn't really be a problem, but if I go on the other side, if I go into the credit card now and I say let's go into the master card, then this one says it's a decrease now, but it's a decrease with an expense form, that's an issue because again, I can't really, if I want to filter by my expenses, the decrease is it's going to be difficult to do it, or if I want to filter and find the payments, I can't really do it because I use the same form and I usually filter by transaction type, remember we filter by this thing over here, I can add a filter and if I wanted to filter by the transaction type, that would be one of the most common filters, so we're going to filter by transaction type, equals and then we can choose our expense form, expense, expense form, boom, and then so but it kind of messes things up, if I use the expense form and it has both increases and decreases, okay, so if I go back, exit and I go into here and I say okay, instead let's pay it down with a pay down credit card form and so now it's going to say which credit card did you pay, we're going to say master card and the payee, I'm just going to call it credit card and we're going to say how much did you pay, let's just say $10 this time on the 31st again and what did you use to make the payment, we're going to say it came out of the checking account, so I made payment with a check, no, if it was a check you can hit here and it'll assign a check number, we're just going to say it was electronic transfer, you have your memo capacity attachment show, cancel clear, save, save and close or save and new, let's save it and close it and now when I go into my balance sheet, I can run it again, take a look at my checking account and if I scroll down I could see now hold on, I don't think it didn't take, I'm going to run it again, okay there it is this time, there's our $10, so now you can see instead of it just being an expense form it's a credit card form, that's a pro and a con here because it's nice that I could sort by my filters looking just for the credit card payments and if I recorded them all with this form, that's kind of nice but if I want to look at all my decreases to the checking account, I would then have to remember that I got to pick up the expense form, the checks forms, the check bill payment forms and the credit card payment forms right but if I go into it I'll drill back down and there is my form going out back on over on the credit card, it looks a little bit better on this side, so if I go into the actual credit card now and I scroll down then I have my payment showing as a credit card payment rather than an expense form like this one was so it's a clear differentiation if I want to sort by my transaction type, so bottom line is it's not the end of the world if you recorded it with an expense form, it's just that it doesn't, it's the transaction form over here, it will make some filtering options a little bit more complex so it would be better like if you'd like you probably wouldn't want to go back and redo all your you know and try to fix the fact that you've recorded something with an expense rather than the credit card payment or anything like that because the transaction will still have the financial statements correct, doesn't really mess anything up but it does make it a little bit more tricky to filter the forms over here so if I go back back to the first tab and again just remember when you're looking at the transaction detail and the bank feeds that if you have both of these set up the checking account and the master card and you paid the the credit card then hopefully when you go in here automatically it will show that it's it's going to be not a category which will be an expense but rather it's going to go over here to record as credit card payment right and then that'll that'll give you that same kind of transaction but you can do it through the bank feeds you can usually record it on the checking account side and then double check it over here or match it on the other side I'm going to open this up again hit the drop down now also note that sometimes people might have done the same thing with like a transfer form like if you use the transfer form to pay off the credit card you could say it's it's going transfer from the checking account and then it's going to go into the master card account and say it was a transfer of let's say five dollars this time 1231 this would be a similar kind of thing so you can kind of I kind of feel like maybe they went a little overboard on the whole different kinds of forms because they might have been able to use one I'm not sure exactly you know how much more benefit you would get from the credit card payment rather than calling them a transfer or something like that to have them differentiated but the transfer could be going either way so again there's pros and cons with it but if if you did it this way you paid off the credit card with a transfer which sometimes the bank feeds does by default it kind of it might record it like as a transfer and then you'd have to remember to record it as a credit card payment but again if you recorded it as a transfer not a big deal because again it's kind of the journal entry is going to be the same so if I go into here so now I I'm going to say didn't take again let's run it again run it so here it is so now you can see it again same thing it's going down but now it's a transfer and remember the transfers can go either way I guess the credit card payment the benefit of it as you know it's always a decrease whereas a transfer could be an increase or a decrease so you know but the bottom line is it's something different here and then if I go on to the other side it would still be something distinct on the credit card so it might be the case that you've recorded some of them as transfers because that's what happened to be the default bank feed went to and again not the end of the world and it's still a nice differentiation from the expenses the point is you have a different transaction type for the normal expenses and the payment so if I go back on over close this out and I go to my credit card in other words sometimes when you go to the bank feeds like and you pay the credit card it might default to a record a transfer because it can see that you have transactions on two of the financial institution bank feed accounts but the other ones a credit card so it might not always pick up that instead of a transfer it should be a record as a credit card so in other words if you saw this come through on the bank feeds it might record it as a category which would be an expense form if it didn't pick up that it was also on the other credit card side or if it did pick it up it might then record the same transaction as a transfer because it has two bank feeds so it might see it and think that it should be a transfer form instead of an expense form but record the same journal entry or if it can tell and be more advanced as it gets better it'll be able to tell that it's actually a credit card and then it'll record it with a credit card payment form which again will record the same transaction but show it as that credit card payment