Vehicle Insurance Premiums

[R. Victor Klassen]

If you really want to go through the liability (accounts payable) process,
use the business features to automate it for you.  When you get the bill,
you 'create bill' (not invoice), entering the information from the bill.
 Then as you pay it off, you 'apply payment', entering the insurance
company as vendor, and selecting the bill, then entering the actual amount
paid.  This will make the entries in liabilities/accounts payable.  It has
the side effect of making the expense happen at the time the bill comes -
because you are now more fully using an accrual accounting system.  There
is some overhead - like creating a vendor for the insurance company.

On Wednesday, September 10, 2014, Gregory Forster <fgreg74 at gmail.com> wrote:
> You're making an extra needless step for yourself. However, to answer
your question, when you credit the insurance liability, you debit insurance
expense.  When you actually pay the liability, you debit the liability and
credit your cash account, much  like account payable in  an accrual
accounting system.  However, other than large corporations, I've never seen
a strict accrual accounting system used.  They've always been either a
straight cash or hybrid accounting system.  WHat I do, is hwne I get the
bill and pay it, I credit my cash account and debit expense.  Hope that
helps.
>
> Greg
>
> On 9/9/2014 3:45 PM, William Storey II wrote:
>>
>> I know that prepaid insurance is an asset that you would amortize.
However how do you account for vehicle insurance that you do not prepay. I
know I could just create the expense each month. But shouldn't I be putting
the whole balance in like a short term liability and then expensing it each
month?  The problem is if I credit liability I have no clue what to debit?
>>
>> Thanks!
>>
>> Sent from my iPhone
>>
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-- 
R. Victor Klassen

www.crazyguyonabike.com/doc/TandemSabbatical