QuickBooks Knowledge for Accountants

Accountants face the task of correcting common errors in QuickBooks data entry by their clients. This requires understanding the way QuickBooks records transactions. Making changes involves following the QuickBooks path that results in correct accounting results.

Accounts Receivable

The “Create Invoices” function in QuickBooks causes a debit to accounts receivable. The “Receive Payments” function in QuickBooks creates a credit to accounts receivable.

Each “Receive Payments” entry must be applied to an invoice.

A negative balance for cash basis accounts receivable is caused by not applying all payments to invoices on the “Receive Payments” entry screen.

Accounts Payable

The “Enter Bills” function in QuickBooks causes a credit to accounts payable. The “Pay Bills” function in QuickBooks creates a debit to accounts payable.

Each “Pay Bills” entry must be applied to a bill.

A negative cash basis balance for accounts payable is caused by entries on the “Pay Bills” screen not applied to bills.

A positive cash basis balance to accounts payable is accurate if a bill is entered for an asset purchase—such as inventory—or for a loan payment.

Payroll

Payroll is entered in a special module within QuickBooks. This permits payroll tax liabilities to accrue each pay period.

QuickBooks uses payroll “items” for entry on paychecks. Payroll items are tied to specific ledger accounts.

Payroll tax liabilities are paid by using the payroll module, not with “Write Checks” entries.

Journal Entries

QuickBooks permits adjusting journal entries. Errors to accounts receivable and accounts payable on the balance sheet cannot be corrected with journal entries.

Instead of journal entries, specific entry screens in QuickBooks are used to adjust payroll tax liabilities and inventory.

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