Why can't I select a liability or owner's equity account as the payment account when entering an expense manually? I want to reduce Owner's equity rather than Cash.

Let me provide you some details and give you a tip on what you can do about this, Cindim.

For now, you can only select a bank, credit card, and the Other Current Asset account as your payment account.  May I know why you want to reduce your Owner's Equity account? Please know that this account is the amount of money that the owner of a business has invested and can't be used as a payment method for your expense transaction. 

You'll want to record a capital disbursement if you want for the Owner's Equity reduced. To do so, follow the steps below:

When paying with an actual check:

1. Click + New.
2. Select Check.
3. Enter the person or business you’re paying back.
4. For the Check no. enter a check number.
5. Enter the following information in the Category Details section.
   • First line: The equity account you use to track the investment in QuickBooks, and the amount you're paying back today.
   • Second Line: Expense account you use to track the interest you pay, and the amount of interest that is part of your payment today.
   • Other lines: Any additional fees and their appropriate accounts.
6. Tick Save and close.

When paying with a debit or credit card, you can record the repayment as an expense. You may also want to reach out to your accountant to give your more details and explanation as to why you're unable to select a liability or the Owner's Equity account as an option and provide you with the best alternative. 

Furthermore, after you've managed your expense transactions, QuickBooks provides several reports that caters the different aspects of your business. You can customize them to ensure you'll get the data you need most. I've added this article for future reference: Customize Reports in QuickBooks Online.

Reply below if you need further assistance when entering expense transactions and choosing an account. We'll always be right here to help you anytime.