Credit card - income vs expense

PeterBPeterB Member Posts: 11

I get soooo confused by my credit card account: when I put in a refund that was paid to my credit card, it takes my balance into the 'minus' zone, as opposed to adding it.

I have entered it as a deposit, and the amount is listed in green - why does it subtract it?

(Sorry if stoopid question...)

edited September 10, 2020 in Accounting Technical Support

Comments

  • BarsinBarsin Administrator Posts: 1,811 admin

    Hey @PeterB

    Credits and debits work differently for different types of accounts. When you put a refund onto your credit card, you're essentially paying the balance and decreasing this amount.

    For example:

    Balance = $0
    I make a purchase for $100

    Balance = + $100

    I get a refund for $100 and another refund for $20
    Balance = - $20

    Hope this makes sense!

  • PeterBPeterB Member Posts: 11

    Thanks, for replying, @Barsin - so to put it simply, it works in the opposite direction from the way a normal account works?

    edited September 10, 2020
  • BarsinBarsin Administrator Posts: 1,811 admin

    Hey @PeterB

    Technically Wave is following general accepted accounting principles (GAAP). Your account may display something differently however I know that some banks try to make it easier for people to read. In general accounting principles, this is typically how debits and credits work.

  • PeterBPeterB Member Posts: 11

    @Barsin - much appreciated.

Sign In or Register to comment.