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January 20, 2019
Question

how can a bank account be current liabilities

  • January 20, 2019
  • 6 replies
  • 49 views

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?

6 replies

JessT
Moderator
January 21, 2019

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.

qbteachmt
Level 11
January 21, 2019

@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.

neil2Author
January 21, 2019

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

September 6, 2019
My client has 4 current liability accounts (a, b, c, d, ) setup which another loaning bank (e) paid off.
They did not transfer funds to my client.  I thought it best to create another current liability account for e, With no opening balance.
 
 Then make payments to each of the 4 by the bank (e). In that manner, all 4 are paid and the bank absorbs all the loan debt. Any help is appreciated.
Level 4
September 6, 2019

Hello there, @Lecker.

Thanks for reaching out to us. Let me guide through the steps in setting up a loan and payment in QuickBooks Desktop.


In order to keep track of the loan and its payments,  you'll need to set up your Liability account.

Here's how:

  1. Go to the Lists menu and select Chart of Accounts.
  2. Scroll down and click the Account drop-down and choose New.
  3. In the Add New Account screen, click the Other Account Types radio button and from the drop-down and choose either. (Other Current Liability: for short-term loans payable over one year. Long Term Liability: for long-term loans payable over a longer period.)
  4. Click Continue.
  5. Enter a name and number for the account.
  6. Click Save & Close.

Once done, you can start set up the vendor (Bank/Lending company). To do that, follow the steps below:

  1. From the Vendors menu, click the Vendor Center.
  2. Click New Vendor.
  3. Enter the name of the bank or the company you need to pay for the loan.
  4. Hit Save & Close.

When they start making payments, separate this into two components: payment on a principal and the interest. Record it by making deposits.

Here’s how:

  1. Go to the Banking menu and select Make Deposits.
  2. If the Payments to Deposit window opens, click Cancel.
  3. In the Make Deposits window.
  4. In the Deposit To field, then select the account to deposit the loan into.
  5. Check the Date and enter an optional Memo.
  6. In the From Account column, select the Liability account you created in Step 1.
  7. In the Amount column, enter the loan amount.
  8. Click Save & Close.

For more reference, you can read this article: Manually track loans.

 

Also, I encourage seeking help from your accountant so they can offer you some advice on correct accounts to use.

 

If you have additional questions, feel free to click the Reply button and I'll get back to you.