Business
For more information, visit: https://www.wizxpert.com/how-to-record-credit-card-rewards-in-accounting/
When using a credit card for business expenses, many credit cards offer rewards such as cash back, points, or travel miles. These rewards, while not direct payments, still impact your financial records and need to be accounted for properly.
As rewards are earned over time through qualifying purchases, they should be recorded as income in your accounting system. For example, if your credit card provides $100 in cash back, this should be recorded as "Other Income" when it is credited to your account. If the reward is in the form of points or miles, they generally don’t have a cash value until redeemed, so they are not recorded until they are used for a tangible benefit, like booking travel or purchasing goods.
When you redeem rewards, such as using points for a flight or hotel stay, it may reduce your overall expenses. In this case, the expense associated with the reward (like a business trip) should be adjusted, effectively lowering the cost of that expense in your financial records.
Properly tracking credit card rewards ensures that your accounting books reflect both income and expenses accurately. It also helps in understanding the real cost of doing business, especially when rewards can offset some business-related costs like travel or office supplies.