Creating Liability Accounts
With ChurchTrac, you can track assets such as checking and savings accounts, as well as record and track credit card liabilities, such as a credit card or other debt. This article shows how to use a credit card as an example.
Creating Your Liability Account
After selecting “Add Bank Account” on the Accounts screen, enter a name for the account and set the Account Type to “Liability.” In this example, we’ve labeled it “Credit Card #2.”
Next, enter your beginning date (closing date) and beginning balance (current balance). This will come from your credit card statement.
When you select "Create Account," this will create your liability account.
Once your liability account is created, click into the account's beginning balance transaction line and edit your Categories and Fund(s) to reflect the line items used in the credit card transactions.
Those individual lines should add up to the total beginning balance shown on your credit card statement.
Note: The beginning balance transaction represents the total balance owed on the credit card as of your beginning date (closing date).
This keeps the credit card balance accurate while still giving you the detail needed to show how that beginning balance, or closing date balance, was made up.
Liability Transactions
To enter liability transactions, select the date and "Expense/Charge" Transaction Type, enter your reference, and add/select your Payee/Description.
Now enter your expenses. For example, you go to Costco with a purchase total of $1224.00. Select "Add Line" to add an expense line item on your receipt.
Note: These line item details will be reflected as Expense Categories in your Budget.
If all credit card expenses are general operations, assign them to the General Fund. Designated Expenses should be assigned to your designated Funds.
Liability Payments
For a liability account payment, use the Account-to-Account Transfer transaction to make the payment.
When you process an Account-to-Account Transfer for a credit card liability payment, ChurchTrac records it as a reduction to your checking balance and a reduction to the credit card liability.
In accounting terms, it credits the credit card account and debits the checking account, reducing the negative credit card balance.
This allows you to allocate portions of the payment across different funds without needing to create separate transfers.
Pro Tip: To review your credit card activity, first pull the Balance Sheet to see the total credit card liability balance. Then run a Search for that same ending date or month to view the individual credit card expenses. This makes it easier to compare the liability balance to the related spending for that period and helps ensure each credit card payment is applied to the correct Funds based on where the original expenses were assigned.
If you have a rolling balance or need additional assistance, reach out to our support team for help!