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.

@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.

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

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.

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.