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Posted by R. C. White on December 10, 2007, 11:29 am
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Hi, Stewart.
Sorry, but your entries would get you an F in Accounting 101. :^{
Debits increase assets or expenses and decrease liabilities or revenues.
Credits do the opposite, of course. Also, "payables" are liabilities, not
expenses. Although the same purchase that increases office expense (with a
debit) also increases accounts payable (with a credit).
So your entries should be more like:
Incur expense for ink of $10.00:
Debit Office Supplies expense: $10.00
Credit Office Depot Payable: $10.00
Then:
Pay bill
Debit Office Depot Payable:: $10.00
Credit Checking account: $10.00
After these two entries, the balance in Office Depot Payable would be zero,
because you don't owe the store anymore. Your bank account would be $10
smaller, because you've paid the bill. And you would be showing that you
incurred $10 of office expense.
In cash basis accounting, you would make no entry at all until you write the
check, then debit it directly to Office Expense.
If you bought the ink in December and paid in January, the accrual method
would end the year with $10 in expense and $10 in payables. The cash method
would show no expense at all in the earlier year and the whole $10 in the
second year.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Quicken 2008 Deluxe in Vista Ultimate x64)
> In theory you should be able to do that by using either cash or
> accrual when setting up the report but in case that doesn't work.
>
> What you should be able to do (and the reason I say should is that the
> last version of Quicken H&B I had that reported more or less correctly
> was 2005) is to use a different class (tag now) for the items entered
> into your payables and the ones entered when you actually write a
> check.
>
> For example:
>
> Incur expense for ink of $10.00:
> Debit payables: $10.00
> Office:Supplies/Payable $10.00
>
> Pay bill
> Debit checking register $10.00
> Office:Supplies/Payable -$10.00
> Offfice:supplies/Business $10.00
>
> Then do your cash reporting using tag Business and your accrual
> reporting using tag Payable.
>
>
>>Is it possible--and, if so, how--to list payables in Quicken and also
>>to include payments in the appropriate categories only when the
>>payment is made instead of when the payable is recorded?
>>
>>For example, I can create liability accounts for payables, either one
>>account for each single substantial payable and/or another payable
>>account for various bills that come in. Either way, I can set the
>>beginning balance as zero and then categorize the debts as they are
>>incurred or become billed. Then, when I pay them, I can pay a bill
>>out of a checking account and categorize it to the liability account,
>>the same as when one pays down a mortgage or car loan.
>>
>>The problem is that, if I run a report by category, all of the records
>>in the payables (liability) accounts are listed. The actual payment
>>is listed as a transfer.
>>
>>I would like the category report to list only the payments actually
>>made, i.e., on a cash basis. Is there any way to do this?
>>
>>I have Quicken H&B 2006, but this question would probably apply to
>>other editions and versions, also.
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