Loan & Credit Card Balances

Problem

Credit Card and Loan balances are not correct. Wrong numbers for liabilities in the balance sheet report.

Diagnosis

Goldenseal construction accounting software versions 1.03 and before really don't do balances correctly for Credit Card and Loan accounts. Users should get the latest version of Goldenseal accounting software for correct numbers.

Solution

With versions 1.04 and later, do the following for loan and cc accounts:

1. If you owe money on the account, start with a negative balance. Otherwise start with a zero balance.
2. A negative balance means you owe money. Most loan and cc accounts will have a negative current balance.
3. The balance sheet shows a positive value if you owe money (since it's in the liability column).

Think of credit cards or loans as just a regular bank account, the only difference is that they usually have a negative balance.

This approach makes them consistent with a checking account that includes a line of credit (which also may have a negative balance at times). In fact if you pay ahead on a cc you'll have a positive balance just like a regular bank acct.

NOTE-- In 1.03 and earlier we were trying to flip everything for liabilities, but sometimes that just didn't work. This way is more reliable, and just as logical.

Comments

Entered 3/8/01 by Casey. Updated 10/24/2010.