I have a library of reference books related to my business. What type of account should I create to keep track of this asset? Should I create a new Group Asset Account or just a normal Asset Account under an existing group, e.g. Plant, Equipment and Property?
Depending on local regulations, it is doubtful any book rises to the level of a capital asset because of its relatively low cost. But if it did, you could treat it as an ordinary fixed asset. Or you could create a custom control account of fixed assets. The financial results would be the same. The determination depends purely on how you want to see the asset reported.
Please explain what you will really be tracking? Do you depreciate these books or just buy and sell them?
I suppose I could treat the reference library as a depreciating asset, but I do not exclude the possibility that I may need to sell some books if the need arises, in which case I would have to use some accounting magic to transfer the books to inventory.
I should also mention that I’m a sole trader and I use Manager’s simplified equity accounting.
You do not necessarily have to use Assets or Inventory for this, hence my question what you will be tracking. As @Tut explains it may not really be at values that you typically record as capital Assets. You could consider making them inventory items but every time you would select an item in invoices, payments and receipts you may end-up with long lists to select from which is not convenient. If the only thing you really need is that these reference books show as Assets then you could simply create a new Account and call it Reference Books (or similar) and add each reference book ideally via “Payments” and whenever you need to sell one you can open the Account, select the one you want to sell, click view and Copy to New Receipt.
To create this Reference Books account go to settings → chart of accounts → new account and complete data as below:
Thanks, eko. I’ll just create my “Reference Books” account under the Assets Group in the Chart of Accounts like you suggest.