In this tutorial Linda Ardissani walks viewers through the correct way to enter a vehicle purchase into QuickBooks Online when the vehicle is owned and titled by the business. She begins by highlighting common bookkeeping mistakes—recording the truck as an expense and treating the loan as an expense rather than a liability. She then demonstrates the proper journal entry: debiting the Vehicle Asset account for the purchase price, crediting a Loan Liability account for the financed amount, and separating loan principal repayments from interest expense. The video shows how to handle trade‑ins (reducing the existing asset account), and how to record prepaid items such as service contracts, insurance, registration, and document fees—either as prepaid assets or expenses depending on their duration. Ardissani explains how QuickBooks Online lets users attach the purchase contract and receipts directly to the transaction, making it easy for accountants to review depreciation details, VIN, and asset information. She also touches on depreciation tracking within QuickBooks and notes that most vehicles are actually titled in the owner’s name, which would require a different accounting approach in a future video. The tutorial ends with a friendly sign‑off and invitation for viewer questions.
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Hi there, Linda Ardissani, Ardissani Bookkeeping. So I thought I would repurpose an article, a blog that I did almost over a year ago on entering a vehicle purchase because it was one of my most popular ones and it needed a little bit of updating, mostly because the video I did was back in the days where I'd never put my face on the camera. So I said, well, I'll do a new intro to this video. So it's about purchasing a vehicle, and it's also one of those transactions that I see quite often in a customer's file when I get a set of books, and I'll notice that somebody's put in a truck purchase, for example. And they'll buy the truck and they put the truck expense in, and then they'll put the loan expense in, and then the interest expense in. So the problem with that transaction is that most of those categories do not apply other than the interest. It is an interest expense. But the truck itself is usually— the purchase is an asset. And of course, a lot of that really has to do with how the truck was purchased. Was it purchased by the owner of the business? Is it titled in the owner's name? Or is the truck actually owned by the business? So those are a couple questions you'd want to ask. If you get involved in the books itself, you'll find as well that a lot of times people, a lot of people, not just with a truck loan, but with a lot of loans, they just write loan expense because they figure it's money coming out of their pocket. So It's an expense, right? Any money out, expense. Any money in, income. Unfortunately, in this case, you borrowed the money to buy the vehicle, so in that respect, it's a liability. So I'm going to take you through the steps in this video to show you how to make this entry, assuming that the truck is actually owned by the business and titled in the business name. 99.9% of the time, if you ask the owner of the vehicle, the vehicle is actually titled in their own name and not the business. But that's another day for another video on how that would be handled in the books. But for today, let's make the assumption that the truck or vehicle is actually titled in the business name. So let's go to that video now.
So here's the contract itself, and here's the journal entry that corresponds to this. One of the things I love about QuickBooks Online is I can actually get this contract attached to the document. So now at the end of the year, this truck was purchased in the very beginning of the year, obviously it was a couple years ago. If I get this in the beginning of the year, I stick it in there, and when my accountant, who's got access to my file, he's not calling me. And I remember the old days, you had to make a file folder for the assets when you had to add to an asset so that you had it ready for the CPA. Now he can look at this and see the vehicle, what type of vehicle, the VIN number. And you can calculate the breakdown of the depreciation on this vehicle right from QuickBooks Online. It saves me phone calls and emails and handing files over. It's just wonderful. I go back to the old days and I know paper and pencil were great, but this is, it's just so much better. So here's the journal entry for this particular vehicle. This was a 2012 Ford, a used truck that was purchased. You can see the loan here, how it breaks out. The amount financed is $16,085.57. You'll see that on the loan. So I created this loan account, which I said before is a liability account, and I'm putting it in the loan— the balance of the loan in here on this initial transaction. So this is the total that I owe, and then obviously monthly you'll see reflected in each payment the loan principal payment and the interest payments.
Okay.
They had a trade-in. They took an old truck in and traded it in. So you see here the trade-in is, is right here on the books because the trade-in was something that's on our accounts as an asset, the truck, and we're removing or reducing the asset by taking out this older truck and turning it in. I needed to reduce the balance in the asset account. So it's always a debit when you increase the asset and a credit when you reduce the asset. So this is where this fits $1,500 would come into play. The value of the truck when he purchased it is on here as well. You'll see that he bought some gap truck insurance. He had some document fees that were part of this transaction as a whole. You'll see that there's a document fee. He has a service contract, so that's also— in this case, it was only 1 year, so, and because the contract was put into the books This transaction was put in the books actually at the end of December when I entered it. This was a client that I had that I didn't have a chance to work with all year. So when I entered this transaction, it had been pretty much expensed at that point, the contract. Normally, that would also probably be an asset on your books that you've prepaid this. powertrain service contract, so you're really prepaying for a possible service. So you might want to discuss that with your accountant or your CPA, but it can go in either place depending on how it was used and the timeframe that it was used. If it's a 1-year, 4-year, you're going to break it out by years and keep it up on the books and the balance sheet for the years that aren't used and then drop it in at the end of the year for the year that— the years that are used. We have registration is on here. You'll see registration down here. That applies to the registration category. He had some insurance he had to prepay for, so that's put on the books here. So it all has to total up, and the total transaction is this $17,000 transaction for this vehicle. And you can see here, here's the cash price for the, for the vehicle, $13,857. $57,000, and that's also on books. So you have to break out this transaction in pieces to show exactly what happened for the loan, and you have to be careful how you put this in. So this loan is actually including— he was loaned the money to get this powertrain, um, on the books as well, this, this insurance policy, the service contract. So that's how come the loan is A higher value than the actual truck itself, and it also includes the deposit— any deposit you would have to make, you could add that in here as well. If you already prepaid a down payment, you can put that in there too. So in this case, the down payment was the traded-in older vehicle, but it also may be where you would have the down payment just came out of the cash out of the books, and this would just show your bank account to show the cash that you took out, which would be a check. And you could apply it there as well. And then at the end of the day, I just download and drop in that receipt so that it shows on here, this entire transaction for the CPA.
So I hope that video was helpful. As you can see, Simba is still sleeping behind me. He wasn't too thrilled with the video. But yeah, I hope that video was helpful. And if you have any questions, comments, or if you want me to produce more videos on topics like these, please let me know. Thanks Thanks for watching. Bye now.
