do you need to know how to record purchasing assets and how it's different than paying for
expenses well then you should watch this video quickbooks for home finance purchasing assets
if you have any questions about this topic you can leave them in the comments section below and i'll
do my best to help you and of course if you feel the video helped you i hope you will click like
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that the net worth would normally be equal to your total assets if you did not have any
debt or any liability but what is an asset anyway well an asset is anything you own that has value
you could buy a car you could buy a couch you could even purchase stock if you own it
and it has value it is an asset so how do you record purchasing an asset well it's very simple
you would record purchasing an asset the exact same way that you record paying for an expense
so you would use the checks window and the money would come from your bank account
and the account you would choose would be an asset account
and not an expense account and that's the only difference when you're paying for an asset
so how do you know that you have an asset at the moment that you're paying for it how do you know
that you don't have an expense well the question is when does the value expire so at the moment you
pay if at the moment you pay you have already used up the value then you are paying for an expense
like paying for a delivery that you already received or paying for a repair
at the moment the person fixes the object you're paying to have repaired but if at the moment you
pay you still have some value that you can use into the future then you have an asset
for example let's imagine on october 10th of 2016 we paid anna's dealership for an electronic
bicycle and we paid three thousand dollars you can add the asset account and add the vendor on
the fly and adding on the fly means you add it at the moment you make the transaction so it's very
simple banking write a check and then october 10th of 2016 now we don't have the name of the
company here what is it uh anna's dealership and his dealership so we can click the pull down and
if the person is not on the list we can click add new and this person is a vendor so we can
type
just type the name for now and click ok and that name will populate the name
field now what about the account is it an expense or an asset well we know
that it's an asset so we have to come all the way up and click add new and the type of account
is fixed asset something that you are paying for today whose value
will last you into the future and click continue and the name of the asset will be electronic bike
or whatever you want to type in save and close now the money amount you paid
three thousand we click save and close save anyway oh oh oh um
you don't really have to assign a class to assets if you're doing home finance because
it doesn't really go on the profit and loss it goes on the balance sheet instead save anyway
now when you look at your trial balance you have a new account in the chart of accounts
electronic bike three thousand and cash in bank has been reduced by three thousand dollars
example two october eleventh paid france furniture for a couch two thousand dollars
you can add the asset account and the vendor at the moment that you make the transaction
so you click banking write a check and this is on october 11th of 2016.
fran's furniture is not on the list so we click add new vendor and we type it in
and then we click ok now the asset is also not on the list so we scroll
to the top and we click add new and it's a fixed asset and it is a couch
and we click save and close and we're paying
2 000 excuse me we're paying two thousand dollars for this couch save and close save anyway because
assets don't need a class when you're doing home finance and you can see the couch now shows up
for two thousand and the cash in bank has been further decreased by the two thousand dollars now
here's the question did your net worth change and the answer is no on your balance sheet you simply
have less cash and more of the other asset and the net worth stayed the same watch you click reports
company and financial balance sheet standard and you can see if we push you know we balance
sheet all dates you can see that we now have the couch and the electronic bike for five
thousand but when we scroll down the total equity the net worth stayed the same and did not increase
you