Thank you so much for the time you took to answer. Your insight was very helpful. I currently have our personal financial information in an Excel file but wanted to put over to QB as a learning tool. Think I'll stick with where I'm at right now. Even at that, your answers were most helpful in other areas of QB that I deal with. Thank you!
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I am having trouble mentally comprehending the accounting aspect
of opening balance equity. I understand the necessity of the account and
(most) of my entries needed, but am struggling with tracking expenses.
I am setting up our personal finances and, for the most part, I
am ok. However, where I am getting confused is entering opening balances
and seeing the expected results in vendor accounts after a payment is made.
For our long term liabilities (house, car), the entries are (cr)
Long terms liability account – vendor and (dr) opening balance equity. When I make a payment, I am using write check
and accounts being affected are: (cr)
checking (dr.) long term liability – vendor (for principal payment) and an
expense account for interest paid. Is this correct?
In setting up medical bills, my GL entry is (cr) Mr. Dentist –
liability account and (dr) open balance equity for the same amount. I choose the name of the physician in the “Name”
field to tie it to the vendor. This puts
each of the medical accounts on the balance sheet as I would expect. Under this scenario, I have two questions:
Question #1 – When I go to Mr. Dentist’s vendor file, it shows
the GL in the transactions list, but no balance next to Mr. Dentists’ account
Question #2 – When I make a payment to Mr. Dentist, I use the write
check feature which will (cr) the checking account and then I’m stuck on what
account to use for the debit account – the liability account to reduce the
balance going forward or an expense account so that I can track the total
expenses for the year? If I use the
liability account, it reduces the liability for the Balance Sheet, but then I
have no way of tracking what total expenses I have paid to this vendor for the
Lastly, once I get the above questions straightened out, do I
zero the opening balance equity and transfer to Retained earnings or will this
be done at the end of the year automatically at closing?
Sorry for the lengthy note, just wanted you to see where my
thought process is going. Any insight
would be appreciated. Thanks in advance.
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