Lesson 31-- Liability Accounts

There are four basic types of accounts used in Goldenseal small business accounting software--Jobs, Assets , Liabilities (described here) and Costs.

Liability Accounts

Liability accounts are for money that you owe to others, or for money that you manage on their behalf.

There are four classes of liability accounts:

  • Credit Cards-- Use Credit Card accounts for 'revolving' credit cards or credit lines that you can draw on or use for purchases.
  • Escrows-- Use Escrow accounts for money that you manage for others. Escrow accounts don't show up on your balance sheet at all.
  • Loans-- Use Loan accounts for mortgages, notes, and other debts.
  • Owner Equity-- Use Owner Equity accounts to track ownership of your business. In accounting terms, equity is a liability since you 'owe' it to the owners.

Credit Card Accounts

Use Credit Card accounts for credit cards and similar 'revolving' lines of credit that you can draw on at any time.

NOTE: Don't create a separate account for debit cards. They can draw directly from the Checking or Savings account that provides funds.

To create a new Credit Card account, follow these steps:

  1. Choose Credit Cards from the Accounts menu.
  2. You'll see a browser window.
  3. Click the New button.
  4. Enter a short account name (for use in menus), and the full account name (for printed forms).
  5. Fill in the other fields (see the Reference Manual for details).

Using Credit Card Accounts

When you make a purchase and pay by credit card, enter a Material Purchase, enter Credit Card as a payment method and enter the credit card account for an 'instant purchase' transaction.

To transfer money in or out of a credit card account, choose Credit Card Transactions from the Bank menu.

Escrow Accounts

Use Escrow accounts for money that you manage on behalf of someone else.

To create a new Escrow account, follow these steps:

  1. Choose Escrows from the Accounts menu.
  2. You'll see a browser window.
  3. Click the New button.
  4. Enter a short account name (for use in menus), and the full account name (for printed forms).
  5. Fill in the other fields (see the Reference Manual for details).
  6. You can enter multiple checkbooks into each escrow account.

Using Escrow Accounts

To transfer money in or out of an escrow account, choose Escrow Transactions from the Bank menu.

Loan Accounts

Use Loan accounts for any loans that aren't credit cards.

To create a new Loan account, follow these steps:

  1. Choose Loans from the Accounts menu.
  2. You'll see a browser window.
  3. Click the New button.
  4. Fill in the data fields (see the Reference Manual for details).
  5. You can enter multiple checkbooks into each loan account.

Using Loan Accounts

To transfer money in or out of a loan account, choose Loan Transactions from the Bank menu.

Owner Equity Accounts

Use Owner Equity accounts to track ownership of your business.

HINT: You probably need only one owner equity account, even if there are multiple owners.

To create a new Owner Equity account, follow these steps:

  1. Choose Owner Equity from the Accounts menu.
  2. You'll see a browser window.
  3. Click the New button.
  4. Enter a short account name (for use in menus), and the full account name (for printed forms).
  5. Enter an address, phone and account number. Then enter the starting balance, and the minimum balance you want to maintain.

Next-- Cost Accounts

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