How to properly account for an eBay account?

Hi All,

Well, I almost made it a full day without asking a question...

I'm still working on understanding the financial accounting of a bookseller. I'm wondering if the way I want to account for an eBay account is proper?

When I list a book on an eBay auction, I incur a listing fee. This is incurred as soon as the listing is placed, making me want to record the expense. What do I record it against, though? It's not really out of my cash (bank) account, as I won't be physically paying it until after the auction closes. At this point, it's more like an accounts payable.

When the book sells, however, the proceeds will more than cover the listing expense and the further sales fees and commisions paid to eBay. Now this account carries a positive balance I can draw to my bank account.

My gut tells me that, even though it will usually have a zero balance, and even an occasional negative balance, I should treat the eBay account as a cash (asset) account. Cash transfers between it and my regular bank account or credit card will handle balances to be paid to or drawn from it.

Does this sound reasonable? Is there another, better method for accounting these types of "e-accounts?"

Regards, Max

Reply to
Max Moor
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You are only recording the liability with accounts payable. You also have to record the expense since it is recognized as soon as you list a book. You can call it "listing expense". Once you pay it by credit card or automatic deduction from your Ebay cash account, you take it out of accounts payable (debit entry), and reduce your cash account (credit entry).

Accounting has a two-sided nature which must be balanced. For example, when I heard that a friend bought a $50K car in cash and bragged about it, I reminded him that he was also out $50K in cash. That is the balance.

Reply to
Rocinante

Rocinante wrote in news:ut6i2bx9y6u5$. snipped-for-privacy@40tude.net:

Hi Rocinante,

Would it be proper to record the listing expense against the venue's (cash-asset) account, though? The liability would still be recorded, just not in an accts payable account.

In real life, the venue account accrues all the various expenses and sales revenues already. It seemed that if I could have the venue account as a cash account in my ledger, it would model reality pretty well. I would credit it when expenses are incurred (debiting the related expense acct), and debit it with the sale price (crediting the "Sales" acct).

I just wasn't sure if having it occasionally show a negative balace was a bad thing for an asset account.

Regards, Max

Reply to
Max Moor

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