Question

A credit card expense was posted to auto expense on September 23, but the credit card account was not paid until October 4. When reviewing the Cash Basis Profit & Loss for the month of September, in which account will the transaction be reported on this statement?

Answer 1

Answer:

Current Liabilities section

Explanation:

Current liabilities section of a profit and loss balance sheet shows the amounts due to third parties within the current year.

These are;

(1) credit card accounts

(2). accrued payroll

(3).taxes

(4). Account payble and

(5). All amounts due within one year related to debt instruments.

Most firm uses credit card for transaction during business. And, mostly credit cards are due within 20 days of receipt of the bill from the company that issued the credit card. For the actual purchases the firm could have up to 40 days if not more to pay for the item purchased.

It is listed in the list of Current Liabilities because there is the firm has more time to pay