Accounting Setup - Categorizing Rent

[apasma]

This is the first time I've worked with PowerChurch. I am setting up our accounts using v.11. We are currently renting a facility. We paid $4,000 in January of this year and will pay another $4,000 in May. This covers our entire yearly rent. Thus our "monthly rent" is $666.67. Our fiscal year begins in March. I entered $2,666.66 as an "Investment Account" since it's not a checking account or a fixed asset. I entered $2,666.66 because we had used two months (Jan & Feb) of rent from the $4,000 (4,000 - 1333.34 = 2,666.66). So, I have three questions:
1. Is this the proper categorization for the $2,666.66?
2. I understand this is a dual-entry system so I have to have the off-setting liability for that rent. Where do I include the $666.67 monthly rent? Under current liabilities?
3. How do I record the upcoming $4,000 second rent payment? Is that a long-term obligation?
It's probably clear from my question that I'm no accountant so thanks for your help.
AGP

[JohnDMeyers]

I think you are thinking of your rent "obligation" as a debt, which is not how you should treat it in your accounting.

PowerChurch uses what is known as "cash basis" accounting as opposed to "accrual basis" accounting. If you look up these words on the Internet, you may get some insights.

In "cash basis" you enter payments "as you make them", not "in anticipation of making them".

I would enter rent expense under EXPENSES, as an expense account.

I would make this entry whenever you cut your check for rent:
CR 01-1110-000 checking $4,000.00
DB 01-5xxx-000 rent expense $4,000.00

and enter a BUDGET of $8000.00 per year in the rent expense to keep track that your rent costs you $8000.00 per year. You can even set up your budget to know that you make two payments of $4,000 instead of 12 payments of $666.67.

I would not use any ASSET or LIABILITY account to track rent.

Secondly, you can tell PowerChurch that your fiscal year starts in March. Go to File / Preferences / Accounting Setup / General tab and you will see where you can set the beginning month.

[apasma]

Thanks John. That was very helpful.