How to: Change a L/T Liability Acct. to an Expense Acct

[Judy Vader]

The church took advantage of a PUD Incentive loan to install a heat pump. I listed it on the Chart of Accounts as a LONG TERM LIABILITY under Mortgages and LOANS. Hence, of course, it does not appear on the Income & Expense Report as an "expense".

At our recent First Quarter Finance Committee meeting, the chairperson voiced a complaint about that, because the payment is $433.84 / month, and he feels that it needs to show up on the report. I explained that I had listed it as a LIABILITY account (not an expense account) so the program obviously wouldn't list it as an expense. He said "Well, it is an expense, so maybe you should get a new program!" I did not say what I was thinking regarding that comment. I just told him that I would see what I could do.

So, .... my question, of course, is: How do I -- or can I -- change it from account number 01-2611-000 under Long Term Liabilities to an EXPENSE ACCOUNT (named???) Would it work to create a new account under MISCELLANEOUS EXPENSES named HVAC EQUIPMENT? If I did do that I do not know how to get Power Church to realize that all of the payments previously made as a Long Term Liability should now show up under the new account number. Apparently this is one of the "blessings" of being a volunteer church bookkeeper. Smile! I will be exceedingly grateful for any help you can offer.

[NeilZ]

The church took advantage of a PUD Incentive loan to install a heat pump. I listed it on the Chart of Accounts as a LONG TERM LIABILITY under Mortgages and LOANS. Hence, of course, it does not appear on the Income & Expense Report as an "expense".

At our recent First Quarter Finance Committee meeting, the chairperson voiced a complaint about that, because the payment is $433.84 / month, and he feels that it needs to show up on the report. I explained that I had listed it as a LIABILITY account (not an expense account) so the program obviously wouldn't list it as an expense. He said "Well, it is an expense, so maybe you should get a new program!" I did not say what I was thinking regarding that comment. I just told him that I would see what I could do.

The way you have it setup is correct, this is a liability that the church HAS TO PAY. Yes it is an expense, but its a long term liability. There are a number of ways to track this, but they do all involve a liability account. This is basic accounting.

So, .... my question, of course, is: How do I -- or can I -- change it from account number 01-2611-000 under Long Term Liabilities to an EXPENSE ACCOUNT (named???) Would it work to create a new account under MISCELLANEOUS EXPENSES named HVAC EQUIPMENT? If I did do that I do not know how to get Power Church to realize that all of the payments previously made as a Long Term Liability should now show up under the new account number. Apparently this is one of the "blessings" of being a volunteer church bookkeeper. Smile! I will be exceedingly grateful for any help you can offer.

You may want to view this topic, it concerns land, but since the heat pump is an asset you can set this up the same way.
viewtopic.php?f=3&t=3993

You can't 'change' an account from a liability to an expense. However you do need an expense account to cover for the interest payment. I would also talk to an local accountant to get information to present to the Finance Committee. Frankly, its obvious that they do not understand how double entry accounting works.