Let me help you pay a bill using a prepayment account, @hazel-hlaing-orb.
You can write a check to the vendor and record it to your Accounts Payable (A/P) account, decreasing the balance until you are ready to enter the final bill.
Then, enter the bill:
Once done, apply the prepayment to a bill by following the steps below:
To view existing prepayments, just follow the steps below:
You'll want to visit our Help Articles page for more tips and references for managing your business with QuickBooks Online.
Keep in touch if you need any more assistance with this, or if there's something else I can do for you. I've got your back. You have a good one.
I'm glad to walk you through the steps on how to use an Asset account to track the prepayment, sg_chris.
You can write a check to the vendor and record it to an Other Current Asset (OCA) account. Doing this will increase the balance until you're ready to pay the final bill.
Let's start by adding the Other Current Asset (OCA) account on your Chart of Account.
Next, write a check to your vendor. Just make sure to select the OCA account from the Category section.
Then, enter a bill when you receive the item. Go to the Category details and select the OCA account and enter the amount of the prepayment as a negative value.
From the Item details, enter the items. The bill will equal the balance owed after deducting the prepayment. Note that recording the bill will reduce the asset account. Once done, pay the bill.
If you need to view prepayments, you can run the Vendor Balance Detail report. Then, customise by selecting Asset from the Account when you filter the report.
Let me know if you have additional questions by commenting below. I'm always around to answer your questions about tracking prepayments.
Let's make sure you'll be able to handle prepayments correctly, sg_chris.
Normally, the steps provided by @RCV is the correct way on how you can pay a bill using a prepayment account. However, since you want to use an Asset account, you can enter it as Journal entry, But, I suggest reaching to your accountant on the entries that you'll have to use. To create a journal entry, follow the steps below:
Once done, you can run the Transaction List By Vendor and customise them to view prepayments entered. Furthermore, Financial reports give you snapshots of different areas of your business. To learn more on what available reports for users, I've added this article for your guide: Reports Included In Your QuickBooks Online Subscription.
Feel free to let me know if you have any concerns about prepayments. I'll be here to help.