As we know, QuickBooks offers some great functionality for handling transactions of fixed assets such as cars, machinery, buildings and so on. It even enables you to track depreciation on these assets. Tracking depreciation can help you in making decisions about whether or not to retain the asset and when to sell it. Thus keeping a record of movable and immovable assets becomes all more important. With that said, lets just check out, how to “record a vehicle purchase in QuickBooks”. A few key points that you must know before handling transactions that include fixed assets like cars are provided below:
Fixed Assets: Assets purchased for long term use are usually called fixed assets. These assets are meant for regular use and are usually more expensive than variable assets. Examples of fixed assets are cars, machinery and land.
Depreciation: Overtime reduction in value of any fixed or variable asset is known as depreciation. Usually, we only calculate the depreciation on fixed assets as they are more expensive.
- 1 How to Record a Vehicle Purchase in QuickBooks?
- 2 How to Record a Vehicle Purchase in QuickBooks Desktop?
- 3 How to Record a Vehicle Purchase in QuickBooks Online?
- 4 How to Record a Vehicle Loan Purchase in QuickBooks?
- 5 How to Set up a New Vehicle Loan in QuickBooks Online?
How to Record a Vehicle Purchase in QuickBooks?
To properly record purchased vehicle or any other fixed asset, follow the steps provided below:
1️⃣ Creating a Fixed Asset Account for Vehicles
🔹 Go to Chart of Accounts
🔹 Click on New
🔹 Select Fixed Assets from the categories provided.
🔹 Enter the name and description for the account
🔹 Select the Detail Type
2️⃣ Adding the Purchased Vehicle
To record the purchase of the vehicle, simply record a purchase and link it to the Fixed Asset Account that you created by following the steps provided above. Once the account has been created, you’ll have to handle depreciation and any loans and liabilities that come with this new asset.
3️⃣ Setting Up Liability Account
A purchase of a fixed asset may come with associated liabilities like loans and EMI payments. To properly record the entire transaction, the user must enter and track the liability. The liability account will be a Long Term Liability Account. To set up such an account, follow these steps:
🔹 Click on the Gear Icon and select Account and Settings.
🔹 Select New.
🔹 Click on Long Term Liability from the provided options and click on Next
🔹 Enter the details for the account such as name
🔹 Click on Save
How to Record a Vehicle Purchase in QuickBooks Desktop?
1️⃣ In the QuickBooks account, click on the add + icon
2️⃣ Then select the check option
3️⃣ Now provide all the information that is important and asked
4️⃣ After that, you have to choose the option Bank or Credit Account
5️⃣ In the drop-down menu of the Category option
6️⃣ You have to select the Asset account in which you want to record a vehicle purchase
7️⃣ Then enter the amount of the vehicle
8️⃣ In the end, click on the Save and Close button.
How to Record a Vehicle Purchase in QuickBooks Online?
1️⃣ First of all, open your QuickBooks online account
2️⃣ Then add the item of fixed asset in your account
✅ Click on the List menu
✅ Then select the Fixed Asset Item List
3️⃣ Now, you see the Item button that is at the bottom left side of the QuickBooks window; click on it
4️⃣ Then click on the New option to add the new one
5️⃣ A new fixed asset item box opened up and in this, you have to provide all the information about the vehicle you have purchased
6️⃣ In the purchase information, you have to provide the details about the account through which it is going to connect and all other information about your vehicle
7️⃣ In the section of Asset information, you have to provide the details regarding your new vehicle purchase
8️⃣ After this, click on the OK button to continue.
How to Record a Vehicle Loan Purchase in QuickBooks?
1️⃣ In the QuickBooks account
2️⃣ Go to the + icon to create the new one
3️⃣ Then click on the Check option
4️⃣ You have to complete the screen of the check by providing the information of all the options that are available
5️⃣ Enter the check number f you send the original check, if you pay the payment online then use the direct withdrawal or the EFT
6️⃣ Then enter the EF or Debit in the field of check
7️⃣ Provide the information in the Account details area of check:-
✅ In line 1, there is the amount of payment that is paid to the principal and the liability account for the loan
✅ In the line 2, the amount enter is of the interest paid and also enter the interest expense account
✅ In case of additional fees if any, then on the following lines; enter that and the appropriate account.
8️⃣ Click on the button Save and close to save all the processes and closes this window.
How to Set up a New Vehicle Loan in QuickBooks Online?
1️⃣ In your QuickBooks account
2️⃣ Click on the Gear icon
3️⃣ Select the Chart of Accounts
4️⃣ Click on the + icon to add the new account
5️⃣ Now, you have to select anyone from the options current or long-term liability
6️⃣ Select the detail type of the liability (this description is given on the right side of both liabilities)
7️⃣ Then click on the Next button
8️⃣ Mention the name of the account (you can name it as the vehicle you purchased or on the bank name from which you took loan like ABC bank or car loan or anything that you remember)
9️⃣ You have to leave the field name Unpaid Balance as blank
🔟 At last, click on the Save button.
At this point, you should leave Unpaid Balance field blank as we’ll be handling that later and note that we are still not yet done with “how to record a vehicle purchase in QuickBooks”. Here we need to pass the loan entry.
Recording both the loan amount and depreciation will be done through simple journal entries. These entries will then be linked to particular accounts.
To Record the Loan Amount, follow the steps provided below:
- Click on the Create Button
- Select Journal Entry
- Click on the Account Drop down options and Select Liability Account
- Enter the amount for loan on the Credit side
- Select the Asset Account that you want the loan amount to be linked with
- Enter loan amount again but this time on the Debit side
You should also record every payment made for the loan. This can be done by entering checks and linking them to the loan.
To record depreciation, you can follow the same steps provided for the loan. Except this time, select Depreciation account instead of long term loan. Also, you’ll have to regularly create journal entries for keeping track of depreciation. Depreciation will have to be calculated by the user themselves.
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