When you entering time in Excel you need to separate between hours, minutes and seconds with a colon (hh:mm:ss). If you only entering two colon separated number Excel assumes it is hh:mm.

To change the number format of a time you first select the cell and then choose Format cells in the fast menu (right click). In the Format cells dialog box you chose the desired number format in the Time category.

Time and dates in Excel is based on a date-time decimal code. The decimal number 0.0 is the time 12:00:00 AM, 12:00:00 PM is based on the decimal code 0.5 and if you format 0.75 to a time you will get 6:00:00 PM (or 18:00 if you use the 24-hour notation).

One hour is in other words 1/24 of a day. If you format 1/24 (apr. 0,0416667) to a time with the format hh:mm you will get 01:00. One minute is by the same way 1/24/60 (or 1/1440) of a day. 0,000694 formated as hh:mm will therefore result in 00:01.

I will post more on counting time later. I also have a blog post with a video on this: http://excelblogger.com/calculate-time-excel/