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Experienced Member

how can a bank account be current liabilities

I have a bank account I use for disability-related expenses. I want to report it as a current liability. How do I do that?

4 REPLIES
QuickBooks Team

Re: how can a bank account be current liabilities

Hi neil2,

 

You create your bank account as a current liability account, but I'd suggest letting an accountant check this setup.

  1. From the Lists menu, choose Chart of Accounts.
  2. Press Ctrl +N.
  3. Click the Other Account Types drop list.
  4. Choose Other Current Liability.
  5. Select Continue.
  6. Name the account like a bank account.
  7. Click Save & Close.

Please go back to this thread if you have other questions.

Established Community Backer ***

Re: how can a bank account be current liabilities

@JessT

 

Please Learn from this input.

 

The Bank stays as Bank. That is the Source/Destination of Funds being used. The Liability is the Why. That means you do Not change Bank. It's still Bank.

@neil2

 

Write the check. On that check is where you list this is Paying Out Liability. Instead of paying rent or office supplies, it is Paying out liability you already have accrued, the same as if that is a Loan Payment or paying down the Credit Card.

 

If you didn't accrue the liability, then you are paying out Expense as usual.

Experienced Member

Re: how can a bank account be current liabilities

Until checks are issued, how can I show it as a liability? Bank accounts show as assets.

Established Community Backer ***

Re: how can a bank account be current liabilities

Banks are Asset because they reflect Funds. That isn't what you are asking about. That is Source of Spending. Not the Why or the Reason.

 

"Until checks are issued, how can I show it as a liability?"

 

You keep skipping the entire Why or Reason. You keep focusing on Banking, but banking doesn't just happen. Banking is happening Because of something else. What is your Something else?

 

Is this what you are asking: We need to Enter a Bill for medical services expense, that we need to pay from this specific bank account,  and Enter bill = to show I will pay it later. That means the Liability = AP.

 

Or, I know we committed to $x as HRA per employee and I am an accrual basis entity, so I need to put $x from Operating Bank into HRA Bank and show this is Liability, which the movement of Funds cannot be Both things at once. It is a Transfer (asset = asset) and then HRA is the Reason I would also enter an Expense offset to Liability = accrual basis expense means you never paid it, but are carrying it as Expense. You pay out Liabilities on the Check entry. Then, at year end, you might 0 out Liability back into Expense, to reduce expense for Funds not Spent that year.

 

You need to map it out; where is the Reason? Not the Funds. We know where the funds are = in a Bank account, which is an Asset and will be the Source of the Spending to meet the requirements of that reason.