I think the theory is that your "incoming" is your paychecks, interest earned, etc and your "outgoing" are all the items you spend including the items in your credit card (dining, gas, entertainment, etc).

So as an example, your incoming $1000 during the month goes against the outgoing $800 in the month (total of the various things you put on your credit card that show up as expenses as well as outgoing money from your checking account such as a debit card purchase) and that shows you are "within your means".

This example would look like this:

income : + $1000
dining : (- $200)
auto : (- $400)
entertainment : (- $200)

The idea being that those are the "more important" categories, and while you had a payment of $800 also made during that month TO the credit card to cover all those costs... you don't want it added or it would look like this:

income : + $1000
dining : (- $200)
auto : (- $400)
entertainment : (- $200)
credt card : (- $800)

(income of 1000 and outgoing of 1600 NOT living within means)

Not sure this set up works for everyone...but you can see why double covering is not mathematically sound.