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sergeydplus
December 19, 2023
Question

record rent as liability and only expense it when payment is made

  • December 19, 2023
  • 2 replies
  • 0 views

Terms of my lease allows me to pay every third month, but rent is invoiced/accrued every month. I use cash accounting method and I do not want record an expense every month, but when my payment to the landlord is actually made.

1) I want to increase my rent liability account every 1st day of the month.

2) Later, once I pay the rent (could be 2 or 3 months later) I want to record rent payment as an expense and decrease lability account.

How I can do it?

2 replies

T
Teri11_2
March 23, 2024

Sounds like you are trying to mix-up cash-basis with accrual-basis accounting.

Cash/Bank is always recorded when paid (credit) or received (debit), regardless of accounting method used.

 

For cash-basis accounting, when rent is paid, credit cash and debit rent expense.

 

For accrual-basis accounting, you record invoice when received as debit expense/credit rent liability and then when cash is paid, debit liability to zero out and credit cash.

    Rainflurry
    Rainflurry
    March 24, 2024

    @sergeydplus 

     

    An option is to enter a bill each month for one month's rent and then pay three bills once every three months when due.  That will accurately book rent expense on cash or accrual basis using the cash and accrual reporting options in QBO.  The bills will post to A/P (not a rent liability account), but that's just how QBO works.  

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