In your Chart of Accounts, the Liability Accounts are setup with Liability Account Numbers: 2001-2999.
Liabilities are used to categorize money that you have collected that is owed to someone else.
Examples of Liabilities include:
- Sales tax
- Membership dues owed to others
- Account Credit
- Uncategorized liability
When sales tax is collected for online sales, the sales tax will be added to your liability account. Sales tax does not run through your budget. When you pay the sales tax, you will be reducing the amount in your sales tax liability account.
This account tracks any credits for members that are currently in your system. Example: Suzy purchases spirit wear online and then returns one of the shirts. Account administrators edit Suzy’s order showing that the shirt was returned. This now gives Suzy a credit. Administrators have the option of making the credit available for Suzy to use on a future purchase online, or they can refund the money via check.
The Account Credit ledger item shows any amount that is currently listed as an account credit that has not been used or has not been refunded.
If you are using TransFirst for your payment processor, you will have a TransFirst Liability account. See the section on using TransFirst with the Accounting Tools for more information.