Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What is the (Accounting) term ' charge back ' mean ?

user-image
Question added by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date Posted: 2015/02/13
VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Chargeback refers to the process of assessing and assigning the costs of a system or service to the departments or customers that use it. If the Marketing Department sent a print job to the internal printing department, the cost of the service would be captured in the general ledger as a chargeback to Marketing. When the chargeback is internal, there is no money exchanged, but budgets are impacted. In this example, the Marketing Department would incur an expense to their budget, while the Printing Department would receive an upside to their income line.

There are three types of chargebacks:

Charge - The listed cost account will pay you money. Credit - You will pay money to the listed cost account. Transfer - One account will pay money to you, and you will pay money to the other account.

Chargebacks can be used to make cost adjustments in project work. In these instances it would change the amount of money paid to subcontractors or suppliers. These chargebacks are typically the result of errors or damages. Chargebacks can be used to settle damage penalties, damage adjustments or bid changes. If a general contractor working on new home construction hired a drywall subcontractor who in turn damaged internal wiring in the home, this would constitute a damage penalty. A chargeback would reduce the amount of money that the contractor paid to the drywall subcontractor. Using the same example, if the wiring had been done by an electrical subcontractor and the damage created extra work, this would be a damage adjustment. The contractor would chargeback the drywall contractor and reimburse the electrical contractor. If the contractor bid on building the home with6 rooms and the developer added a guesthouse, this would constitute a bid change. The contractor could then use a chargeback to increase (or decrease, if applicable) the total bid price. The chargeback could also be used to specify a change even if there was no corresponding change in cost.

Mir Mujtaba Ali
by Mir Mujtaba Ali , Internal Audit Manager , Confidential

Charge back is allocation of cost and resource usage based on actual usage or a predetermined amount. Each time you are encountered with one, a credit charge back must be manually entered into your accounting system.

 

Kripesh Krishnan Kutty Nair
by Kripesh Krishnan Kutty Nair , Merchandiser , Al Seer Group

Thanks for the invite sir, I really don't know the answer, if you can, pls let me know the right answer.

 

Thank You for the invitation to make my knowledge grow

Waqas Raza Khan
by Waqas Raza Khan , Accountant , Cold Store Group of Saudi Arabia

Agree with Mr. Mir Mujtaba Ali and Venkitaraman

Salah Othman Yousef Alshambaati
by Salah Othman Yousef Alshambaati , مدير ادارة الحسابات , شركة انفال الجديدة للتجارة والمقاولات

I agree with Mr VENKITARAMAN answer

Wasi Rahman Sheikh
by Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

Agreed with Mr Mujtaba <<<<<<<<<<<<

Malik Khalid Mahmood
by Malik Khalid Mahmood , Regional Finance Manager , Leosons International FZ LLC

agreed with mr Mujtaba

 

The settlement of expenses

Ahmed kandil
by Ahmed kandil , Cost Controller , Battour Holding Cpompany

Agree with Mr. Venkitaraman

thank you for invitation 

Khaled Mohee Eldeen Abbas Mahmoud
by Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed

I agree with answers provided, thanks

fadil hoory
by fadil hoory , محاسب , شركة مقاولات بالسعودية

 yes      I agree    with     Mr VENKITARAMAN  

حسين محمد ياسين
by حسين محمد ياسين , Finance Manager , مؤسسة عبد الماجد محمد العمر للمقاولات العامة

agree with Mr Mir Mujtaba Ali>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

More Questions Like This