Accounting for cashback Accounting for cashback
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  1. #1

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    ladymuck's Avatar
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    Default Accounting for cashback

    Just pondering over accounting treatment of things like cashback and where you can use accrued points to offset all or part of a balance.

    Amex are quite straightforward as their cashback / points application is directly linked to a transaction so I enter the journal as:
    DR Bank Account
    CR Overheads (e.g. Consumables)

    However, Capital on Tap allow you to use points to reduce your general balance. So where would I put the CR side of the journal? Would I just pick an overheads account, maybe the one with the highest balance?

    Also, am I going about it wrong - should I be treating statement credits as income?

    This is where I started to think the card providers approaches are important. With Amex and it being transaction linked (e.g. if I spend with Dell I get 10% back, or a certain number of points can be used to credit against a selected transaction) I feel it should be treated as a discount as it's traceable to a particular purchase. However, with CoT, I'm not so sure. In both cases 'someone else' is paying off part of my card bill, so maybe it is income?

    I've not used CoT points for a statement credit but I just starting thinking about it, disappeared down a rabbit hole, and wondered what the collective thought.

  2. #2

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    Quote Originally Posted by ladymuck View Post
    Also, am I going about it wrong - should I be treating statement credits as income?
    Yes.

    You want cashback in your personal account. It's about the only legitimate (probably) way to siphon cash these days.
    It's one reason to use personal cards and claim back.

    But yes it's income. Like interest on a savings account. Unless the cash back is for a refund.
    See You Next Tuesday

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    That's an interesting point of view. I have always been of the opinion that you should keep business and personal as separate as possible. Blurring the two opens up potential cans of worms.

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    Quote Originally Posted by ladymuck View Post
    That's an interesting point of view. I have always been of the opinion that you should keep business and personal as separate as possible. Blurring the two opens up potential cans of worms.
    Yet you claim airline miles and hotel points - this is really no different and has the added benefit of consumer protection rights if necessary.
    merely at clientco for the entertainment

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    Quote Originally Posted by ladymuck View Post
    That's an interesting point of view. I have always been of the opinion that you should keep business and personal as separate as possible. Blurring the two opens up potential cans of worms.
    they're not blurred though. I have a clear delineation in my accounting records.

    The payment method used is whatever is most convenient (ahem). and as I don't have a company credit card, personal CC is more convenient. I use company debit card for domain renewals MS license subs, mobile bills, etc. but ad-hoc purchases (and the refunds/cashbacks associated with them), using Paypal/BA Amex card.
    See You Next Tuesday

  6. #6

    More fingers than teeth

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    Anyway, getting away from the personal vs company card debate for a moment. It seems I've been dealing with the cashback element from Amex incorrectly.


    Not sure how to update prior years but this year is easy enough to fix. I earned back my annual fee in cashback offers last year

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