Credit card
In one sentenceA card through which the bank gives the holder a credit limit to buy with and repay later, so it is a liability of the holder, not a deduction from their balance.
Simply put
When the business pays its expenses with a company credit card, the money does not leave the bank immediately; a liability to the bank arises, paid on the card statement's due date.
Record each expense with its invoice when buying, then record the statement payment from the current account. Do not wait for the statement to record the expenses.
Worked example
The purchasing employee at a contracting business bought office supplies with the company credit card for 2,300 SAR including VAT.
Dr Office supplies expense2,000
Dr Input VAT300
Cr Credit card payable2,300
VAT from the VAT-inclusive amount2,300 × 15 ÷ 115 = 300
Liability of the business paid with the statement2,300 SAR
Don't confuse it with
madamada deducts from the account immediately, while a credit card defers payment and creates a liability.