Learning About Asset or Liability Accounts



When to use Quicken asset and liability accounts

Assets are what you own, liabilities are what you owe, and the difference between them is your net worth.

With QUicken asset and liability accounts, you can track such things as loan balances, the value of your card or other personal possessions, and the cost basis of your home. For a small business, asset and liability accounts can track capital equipment, accounts receivable, and accounts payable. If you set up accounts for all your assets and liabilities, QUicken can include them in net worth reports and graphs to give you an accurate view of your total financial picture.

When to use Quicken asset accounts

The balances in your bank and cash accounts represent only part of your total assets. Quicken has additional account types you can use to track your other assets: asset accounts and investment accounts. Use investment accounts to track assests such as stocks, bonds, mutual funds, and other investments that fluctuate in value. Use asset accounts to track the following:

Type of asset
Sample uses for asset accounts
Loan notes you hold You can track money you've lent in an asset account. Then, when you receive a payment, deposit it in your bank account as you normally would, but create a transfer to the loan asset account for the amount of the principal payment so the asset account tracks the ammount that us owed to you.
Home cost basis Set up an asset account to track your home improvements over the years. Use the purchase price of the home as the opening balance for the account, and then record each improvement in the register as you make it (generally as a transfer from the account where the money was actually spend). Many types of improvements add to the cost basis of your home.
Contents of your home Create an asset account for your home inventory and use it to track furnishings, major appliances, electronics, jewelry, and other property you keep in your home. Enter each item with its purchase date and price as a transaction in the asset account. If your property is damanged or stolen, your records can help to settle your claim with the insurer.
Prepaid medical or dependent care expenses If you set aside pre-tax dollars for medical or dependent care expenses, you can use an asset acount as a holding account for tracking withheld from your paycheck. Use a split transaction to transfer part of your paycheck to another account.
Capital equipment Track the value of capital equipment as it is acquired and track depreciation as it occurs.
Accounts receivable Keep up-to-date accounts receivable records.

 

When to use Quicken liability accounts

The balances due on your credit cards reporesent part of your loabolotoes. Use Quicken's liability accounts to track these other liabilities:

Type of liability Sample uses for liability accounts
Loan balances You can use liability accounts to keep track of money you've borrowed, such as car loans, home equity loans, and mortgages. Then, when you write a check to make a loan payment, create a transfer to the loan liability account for the amount of the principal payment, so the liability account's balance always shows the amount you owe on the loan.
Accrued liabilities Track accured liabilities, such as payroll taxes and income taxes payable. When you do the payroll for your small business, transfer the payroll taxes portion of each check to a payroll liability account as part of the split transaction. This technique makes it easy for you to keep track of the amount that's due for payroll taxes.
Accounts payable Keep up-to-date accounts payable recors for your small business

 

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Tip: To find out which version of Quicken you are using, open Quicken go to Help menu and select About Quicken.