All Thing Quick-Books Online

All Things QuickBooks Online

Posting Transactions

There are two types of transactions you’ll need to consider when using QuickBooks Online. These are posting and non-posting transactions. This accounting Guide developed by Metro Accounting and Tax Services, CPA, is designed to help QBO users understand the differences between both types of transactions. It is also important for QBO user to understand the difference between accrual and cash basis accounting, sales vs income recording and reporting. For more guidance on this and all things QBO, don’t hesitate to call the office at 470-240-5143.

Posting transactions record debits and credits to the general ledger. For example, an invoice prepared for a customer posts as a debit to accounts receivable and a credit to an income account. Posting transactions in QuickBooks Online related to Customer Sales include:

1.    Invoice

2.    Receive Payment

3.    Credit memo

4.    Sales receipt

5.    Refund

Non-Posting Transactions

Non-posting transactions on the other hand facilitate the business cycle by storing detailed information which may be used in a related posting transaction. They do not post a debit or credit to the general ledger.

For example, an estimate is a non-posting transaction; it stores detailed information about proposed products and services you would like to sell to a customer, including notes and attachments related to the proposed sale.

Upon acceptance of the estimate and delivery of the goods and services, you can convert the estimate into an invoice. The invoice will debit and credit the general ledger; the estimate does not.

If the estimate is not accepted by the customer, it is marked as rejected and nothing will post to the general ledger. Non-posting transactions in QuickBooks Online related to Customer Sales include:

1.    Estimate

2.    Delayed charges

3.    Delayed credit

Accrual vs. Cash Basis of Accounting

For posting transactions, the date the transaction is recorded may be different than the date it is reported. The accrual basis accounting method involves reporting income at the time it is earned, not when the payment is made by the customer.

For example, credit sales are made to a customer on 1/1/2017.  Payment is received for the sales on 2/1/2017.

On 1/1/2017 the sales would be recorded as usual but because payment was not received at that time, Accounts Receivable would be debited instead of the bank or cash account. This is what the accrual method of accounting does, it allows you to record the sales transaction even though no payment was received for the sales at that time.

The cash basis accounting method involves reporting income in the period the cash is received from the customer, regardless of when the product was sold or when the service was performed.

For the cash basis accounting method, in the above example sales would be recorded on 2/1/2017 when the cash is actually received. Accounts receivable would not play a part in this basis of accounting.

Sales vs. Income: Recording

To record a sale in QBO, use a sales form with a product/service item. Sales forms are used to record financial transactions related to money coming into the business.

Sales forms are found on the Quick Create menu in the Customers column. When you use product/service items on a sales form (invoice or sales receipt), sales activity will be posted to the income account that is mapped in the product/service item’s Sales Information section in the field that is labeled Income Account.

If you do not use a sales form or product/service item, you can record income directly by using any transaction that lets you select an income account from an account dropdown menu. For example, a deposit will be posted to the income account you select. A deposit transaction will not be included in Sales reports.

Sales vs. Income Reporting

It’s important to understand the difference in terminology between sales vs. income in QuickBooks Online.

• Income (or Revenue) is recorded directly by selecting an income account from an account drop-down field on a transaction, such as a deposit or journal entry.

On a Profit & Loss report, you can drill down into the income account and find this transaction.

On a Sales Report, transactions recorded directly to accounts will not be included.

• Sales are recorded by using a sales form and product/service item to record the income to the account mapped to that product/service item.

In the end, the sale may be recorded to the same income account as if you had posted it there directly, but using product service items gives you more options for reporting and more control on how activity is recorded.

On a Profit & Loss report, you can drill down into the income account and find transactions posted directly to income accounts and transactions posted by sales forms using product/service items mapped to that income account.

On a Sales Report, only transactions recorded using sales forms and product/service items will be included.

All posting transactions record activity to the general ledger and can be found on a financial report, such as the Profit & Loss report. However, only transactions posted using product/service items on sales forms will be found on QuickBooks On line’s sales reports.

For all your QBO needs let the QBO ProAdvisor’s at Metro Accounting And Tax Services be your expert guide. Call the office at 470-240-5143 and we’ll help you navigate the QBO arena.

User | 24/10/2017