[Hildy]

I've been asked to maintain a small program that tracks fees charged for attending a conference versus payments for those fees. A table called Ledger has an entry for each fee and an entry for each payment. The "fee" goes in the table as a positive number; the payment goes in the same field but as a negative number. A simple sum of that field accurately provides the registrant's account balance. Likewise, a sum of the "Payments" (which are negative numbers) gives an accurate representation of the amount paid, while a sum of the "fees" (which are positive numbers) accurately shows the amount due/assessed.

The problem arises when someone overpays. The software has a facility for entering "credits," but they go into this ledger table as negative numbers, which distorts the registrant's account.

For example, a registrant is assessed fees of $49, $89 and $75 (=$213), and has a payment of $275. If the software puts in a CREDIT of $62, it goes into the ledger as a negative number, so that a sum of the fees is $213, but a sum of the payments/credits is $337. If the "credit" had gone in as a positive number, it would have correctly shown payments of $275 and an offsetting amount ($62)--essentially a refund given the registrant--to bring his balance to zero.

I apologize for what is a very long and probably barely understandable explanation, but my question is, Why does a "credit" go into the ledger as a negative number if it is intended to offset an overpayment? Should it also go in the ledger as a negative number if it is intended to reduce the amount charged for something? Are there different kinds of credits? (Sorry. Not an accountant and don't really understand even this simple system of recording fees and payments.)

[jerileycpa]

Yeah, your explanation of the table and the way the software works is a bit confusing. So, perhaps the thing to do is address the issue of "credits." Because "credit" can mean differing things to different people - and in accounting.

In accounting, a credit is simply one side of an accounting transaction. A debit is the other side. But some accounts normally have credit balances and some debit balances.

When you're dealing with cash accounts, acredit is a negative number because it reduces the amount of cash that youhave. When you're dealing with an income account however, like “fees assessed,”a credit is actually a positive number because it increases the amount ofincome that you receive.

When you record an amount due on someone'saccount, the positive number is a debit entry. Then when they pay what theyowe, the negative number to reduce the account balance to zero is a creditentry. If they overpay on their account, then the account has a credit balance.In order to refund them money, you have to enter a positive number which is adebit entry.

I'm not sure what more I can say if you don'tunderstand accounting. Maybe you could get a little training. Good luck.