I was going to create a bill and assign it to current asset account. Per my understanding it should increase asset value and also create liabilities to pay outstanding balance. So the question is how to record this improvement to increase current asset value before contractor bill is paid.
That is correct, when you enter the bill and use the WIP asset account, that account balance will increase (accrual) and will show as an increase in cash basis when you pay the bill.
the above has nothing to do with income tax, since those are balance sheet accounts, and as you stated the total cost of the flip will only be an expense (COGS) when you sell it.
QB is accrual based accounting, it only reports on cash basis. Cash basis generally is only used at tax time, and in QB it is really a modified cash basis report. True cash basis would mean no liability at all, and no receivables either
