On 30 Oct 96 02:58am, Chuck Thompson wrote to Carole Capuano:
 CT> When you pay for them by transfer from a checking account, say,
 CT> to the credit card account, the "asset" is wiped out, and the
 CT> checking account is reduced by the appropriate amount.  For the
 CT> short period of time between purchase and payment, your assets
 CT> are, actually, increased.
Nope.  Charges are entered just like checks, but there's no balance
or it's already negative, so the balance is either negative or zero
(if the entire thing's paid current).  The account is, in effect, a
liability account.  Paying the bill acts as a "deposit" to it, so a
payment reduces the cash asset and the liability simulatneously.
In effect, it's accrual accounting, recognizing the purchase and the
associated liability when made then reducing the liability when it's
paid.
The advantage comes when transactions are cleared when the statement
is reconciled.  Doing a year-end then purges them from the new data
file.
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