It’s important to track all of your finances in QuickBooks. Specifically, you need to track more than just income and expenses. In today’s episode Bernard Roesch explains how to track Expenses>Capital Expenditures in QuickBooks.
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What are Expenses>Capital Expenditures?
A capital expenditure is the purchase of equipment or other large items above a certain dollar amount. Typically, Expenses>Capital Expenditures are items that have a useful life of multiple years that you would not expense entirely in year one. Businesses usually have a threshold above which they consider an expense a capital expense for the purpose of accounting.
How to Log Expenses>Capital Expenditures
For the sake of this example, assume the piece of equipment costs $10,000 and is used over a period of five years. You would log the transaction similar to a normal transaction but simply to a different expense account. Rather than logging to a normal expense account, you would log the transaction to a fixed asset account on the balance sheet. Ideally, you would split that fixed asset account into sub-accounts if you have multiple different pieces of equipment. Then periodically over that five-year timeframe, you would record depreciation as an expense against that balance sheet item. While this expense would not affect cash flow, it would affect the profit and loss statement as a non-cash expense.
Need Help Logging Expenses>Capital Expenditures?
Although this may sound complicated, it’s important to track your finances at this level of detail in your business. This helps you to have an accurate financial picture of your business over time. Contact Bernard today for help setting up the logging of Expenses>Capital Expenditures and much more.
Looking for the right QuickBooks software for your business? MISSION Accounting can help.
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