An asset account is a general ledger account used to sort and store the debit and credit amounts from a company’s transactions involving the company’s resources.
The balances in the asset accounts will be summarized and reported on the company’s balance sheet.
Learn how to set up an asset account in QuickBooks Online.
Generally, the asset account balances are debit balances and are increased with a debit entry and decreased with a credit entry.
Examples of Asset Accounts
Some examples of asset accounts include Cash, Accounts Receivable, Inventory, Prepaid Expenses, Investments, Buildings, Equipment, Vehicles, Goodwill, and many more.
Two asset accounts, Allowance for Doubtful Accounts and Accumulated Depreciation, are known as contra asset accounts since these accounts are expected to have credit balances.
Also Read: What is QuickBooks QB data service user.
Asset Accounts Are Permanent or Real Accounts
Asset accounts are referred to as permanent or real accounts since they are not closed at the end of the accounting year. Instead, each asset account’s balance at the end of the accounting year is carried forward to become the beginning balance of the next accounting year.
How to Record Fixed Assets in QuickBooks Online
QuickBooks Online is progressive SMB’s top choice for managing payments, invoices, and expenses.
This software can become an integral part of the bookkeeping process, but things can get challenging when it comes to tracking purchases of tangible assets.
So if you’re looking for a way to record fixed assets in QBO, the Precoro team has prepared this handy guide for you.
What is a Fixed Asset in QuickBooks Online?
A fixed asset (also referred to as long-term, noncurrent, or capital asset) in QuickBooks means a physically present tangible asset that cannot quickly be converted into cash.
It’s a relatively permanent resource of a company used in business operations to generate income, unlike parts of the inventory for reselling.
The cost of such assets is recorded on a balance sheet rather than an expense on the income statement, as they’re expected to be used over multiple periods.
Fixed assets would be recorded as PP&E, which stands for property, plant, and equipment.
They are also subject to wear & tear (aside from the land assets), which decreases their value over time. This process is called depreciation.
That’s why businesses periodically transfer a capitalized cost’s portion on the balance sheet to an expense on the income statement.
Registering purchases as fixed assets can be beneficial for companies with more than one reporting period.
Examples of fixed assets include:
- Real estate
- Computers
- Office equipment
- Software
- Machinery
- Vehicles
Recording fixed assets allow you to monitor depreciation and mileage, equipment’s location and serial numbers, warranty information, and other essential data.
Fixed assets are a crucial but often overlooked part of tracking your finances, managing expenses, and efficiently filing tax reports by the end of the reporting period.
Types of fixed assets you can manually add in QuickBooks
- Buildings: facilities owned by a company;
- Furniture & fixtures: chairs, tables, filing cabinets, cubicle walls, etc;
- Improvements: money spent on labor and materials used to improve your company property;
- Land: purchased cost of land. Also, it is regarded as costs spent on land improvements;
- Long-term office equipment: equipment that has a useful life of greater than one year;
- Tools, machinery, and equipment: equipment for work outside the office which has a useful life of greater than one year.
How to Add a Fixed Asset Item in QuickBooks?
1. Open the Fixed Asset Item List
On the menu bar, click List > Fixed Asset Item List.
2. Add a New Item
Click the Item button in the lower-left corner of the list. In the pop-up menu, select New. Next, fill in the Asset Name/Number field.
3. Select Account
Then, pick the fixed asset account you’ll use to track the asset’s value from the Asset Account drop-down.
Don’t see the right fixed asset account? Just create it on the go by entering a new account name and pressing Enter.
4. Input Purchase Information
In the Purchase Information section, add purchase terms and specify if the item is new or used with a click of a button.
Pick the date of the asset’s purchase in the Date field input. Optionally, you can also identify the vendor.
5. Fill in the Asset Information
In the Asset Information section, describe the item using the Asset Description box or the Notes section.
Here you can specify the fixed asset location, the purchase order (PO) and serial number, and the warranty expiration date.
6. Save and Close
Click the OK button below to save and close the New Item window. If you want to add another item click Next.
Read More: The Importance Of Results-driven Online Marketing
