How to Use Long-Term Liability Accounts in Quickbooks
Long-term liabilities are liabilities that are longer than one year. For example, if you have a five-year truck loan, you have a long term liability and need to set up a long term liability account. Also, when you incur a liability you will either receive cash (for example, in the case of a loan), in which case your cash account will increase, or an asset (in the case of a purchase), in which case an asset account will be needed.
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Instructions
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Add a long-term liability account. Using the "chart of accounts," choose Account, then click New. The "add new account" window will appear; choose "other account types," then from the drop-down list choose "long-term liability," then click "continue." In the account name field put "truck loan" (or car loan, business loan,etc.). Without entering a beginning balance, click save and next.
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Record an increase in cash for the amount of the truck loan, lets say $25,000. In the chart of accounts, double-click the cash account. In the Increase field, type $25,000. In the Account field, select the truck loan liability account and click record. Now close the register window and close the chart of accounts.
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Set up an item under fixed assets. Select fixed asset item list from the list menu. Under item menu select New. In the name/number field, type "truck" then complete the purchase information section and the asset information section. Using the asset account drop-down list choose "truck cost," click OK then close.
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Record the amount of the loan payment. Under the banking menu, choose "write checks." In the "Pay to the Order of" field, type the payee name and then press tab. Enter the amount of the check for the payment. Click the expenses tab, and then click in the account column and choose "interest expense" then "loan interest expense account." In the Amount column highlight the amount that Quickbooks pre-filled and then type that amount. Charge the remainder of the expense to the truck loan liability account then click save and close to record the payment.
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