It is essential for setting up of any business; one must need to buy some assets like car machineries, computers, laptops, buildings etc. These assets could be purchased in cash or on loan of easy installments. And we all know that the depreciation starts on these assets the day we purchase them. Being a businessman and having a proprietorship firm, it is obvious for you to get worried on how to record the depreciation amount on purchased assets. How to record purchase of vehicle in cash in QuickBooks? How to record purchase of vehicle on loan in QuickBooks? How to take decision on reselling your vehicle? How to calculate the depreciation amount incurred on purchased vehicle? In this article you will find all the answers to all your questions after knowing which you are not required to worrying at all.
Before we proceed to learn how to record a vehicle trade in QuickBooks, you must know the following key points:
- Fixed assets: it is essential for any business to buy some assets like cars, photo stat machine, printers for their long term and regular use. The assets so purchased for regular use are called fixed assets. Compared with variable assets, fixed assets are more expensive.
- Depreciation: when the price of fixed assets reduces with the passage of time or we can say the reduced value of fixed asset over the period of time is called depreciation.
Now let us learn the steps for recording a vehicle trade in QuickBooks.
- Open a fixed asset accountfor vehicle purchase.
- Navigate on to chart of accounts.
- Go to
- Fixed assets are to be selected by you from the categories provided.
- You need to give a name and description for the new account created by you.
- Now please select the detail type.
- Add the vehicle that is purchased
By following the steps mentioned above, purchased vehicle can be recorded by linking with fixed assets account. If the vehicle is purchased on loan, then it is also to be recorded in QuickBooks. The value of depreciation on purchased vehicle is also to be calculated and recorded in QuickBooks.
- Liability account is to be set up
You need to set up a liability account in case a vehicle is purchased on any loan or on easy installments. This account could be named as long term liability account that can be used for recording of entire transactions and liabilities. The user can also track all its liabilities through this account.
Below mentioned are some steps to be followed in order to set up a new liability account.
- You need to select account and settings by clicking on Gear icon.
- Select New by clicking on it.
- Long term liability from the options available and dress on next.
- Details like name etc. are to be filled for account.
- Now save the file by clicking on it.
Some easy steps to set up a new vehicle loan account in QuickBooks online.
- Press on Gear icon in your QuickBooks account.
- Chart of accounts is to be selected.
- In order to add new account you have to click on plus icon.
- Now you can select current or long term liability from the options provided.
- You need to describe the type of liability by selecting the detail type.
- Now you can navigate on to the next button.
- The account name is to be mentioned. It is your choice to save the account on your name, on a car name or on Bank name from which the loan has taken.
- Unpaid balance field it is to be remain blank.
- You can click on save button to save the details filled.
Please be noted that unpaid balance field is to be remain blank as we fill it later with paid EMI on their due dates. Now we will learn to make loan entries in QuickBooks by creating journal entries.It is essential to make record of loan and depreciation on any purchased vehicle by creating journal entries.These entries should be linked with their particular account later.
Follow these simple steps to make record of vehicle loan.
- Navigate on to click button.
- Journal entry is to be selected by clicking on it.
- Liability account is to be selected by clicking on dropdown options.
- You need to fill the amount of loan in the space provided on credit side.
- Loan amount is to be linked with asset account by selecting the asset account.
- Now loan amount is to be filled again but on debit side
You must be careful that each and every payment towards loan is to be recorded correctly and on time by entering the checks and correctly linking them to their respective loan account. Depreciation account can also be created by following the same steps as mentioned above. We hope this article helps you in understanding the easiest way of recording vehicle trade in QuickBooks.
