Managing the accounting tasks in your business can be complicate at times. This is where a quality accounting software like QuickBooks can be of real help. However, if you are a new user of QuickBooks, you may take a bit of time to be well versed with some of its basic features. Recording a journal entry is one such feature and no wonder why we receive many queries like ‘ how to record Journal Entries in Quickbooks Online and how to create a journal entry in QuickBooks and so on.
Do you have similar questions in mind? Just go through this blog. We will tell you everything you should know. We will show some simple steps on how to record Journal Entries in Quickbooks Online.
First things first! Let’s get to the basics!
What Is A Journal Entry In Quickbooks?
A journal entry is basically an account transaction posted into the general ledger. The journal entry feature in QuickBooks would help you if you want to enter a transaction into the software manually (such as correcting an error). The software ensures that any credit you make is balanced against a corresponding debit and vice versa. A journal entry is also created in QuickBooks to transfer money between expense and income accounts. It can help transfer money from an equity, asset or liability account to an expense or income account.
Steps involved in recordingJournal Entries in Quickbooks Online
1. Go to the Journal Entry Section in Quickbooks
When you click the plus (+) sign at the top right corner of a file, you will see a drop-down menu named ‘Create’. Among many options therein, you will see the ‘Journal Entry’ option too. On clicking this option, you will be lead to a window where you need to fill in certain information before going ahead.
2. Enter the Journal Number and Date
Recording Journal Entries in Quickbooks Online is a fairly simple affair. Once you open the form on your screen, you will see the current date that is automatically entered by the QuickBooks software. Your first task would be to edit this journal date if you are recording an entry from any other date. You will also need to edit the correct journal number. Else, QuickBooks would enter the sequential number from the system automatically.
3. Fill in the information required
You need to enter relevant information as shown below-
- Category– Here you need to enter the correct account specification. For example, let us suppose we are creating an entry related to prepaid rental insurance. As it is prepaid usually for a year or a month, it can be considered as “other current asset”, but, you need to expense it out every month. Therefore, while recording a journal entry, we would add two different accounts in the category section. The first account is “Company Checking Account” and will be drawn from your “Chart of Accounts” section. In our example, this account will lose money when rental insurance will be paid by you. The other account, named “ Prepaid Insurance Account” will gain money when you prepay the insurance for the entire year. Please note that, in any journal entry in QuickBooks, there will be two accounts- one to debit and one to credit.
- Debit & credit amounts– Once you have entered the correct accounts, the next task is to fill the corresponding debit and credit amounts. As you can see in the screenshot below, a debit amount has been added to the Prepaid Insurance account and a credit amount has been added to the Company Checking Account.
- Add description– The next step in recording Journal Entries in Quickbooks Online is to enter information in the description column. If you relate to our example, the description says that the entry is making a prepayment against rental insurance.
- Add name– In this column, you need to enter the name of the vendor, customer or the employee.
4. Make recurring journal entries
Make sure that the total of the credit column matches with that of the debit column. If there is a mismatch, you will need to continue filling in the distribution lines till both the totals become equal.
5. Save & close
Once you are satisfied regarding the correctness of your entry, you can click ‘Save & close’ to complete.
You may have seen from the above-mentioned discussion that recording Journal Entries in Quickbooks Online is fairly simple. A journal entry in QuickBooks is perhaps the best example of what double-entry accounting is. As you know, when you debit something, something else always gets credited. From this angle, you can always think every QuickBooks transaction to be a journal entry. For example, a customer invoice would credit revenue account and debit accounts receivable. On the other hand, a vendor bill would debit cost of goods/expenses and credit accounts payable. This means, irrespective of whatever transaction is entered into QuickBooks online, a journal entry always runs behind the scenes.
Points To Note While RecordingJournal Entries in Quickbooks Online
Considering the following points would be of much help to you-
- Multi-currency is not supported by QuickBooks online while creating a single journal entry. This means, you need to assign a separate journal entry for each currency.
- If you want to rectify a transaction after creating a journal entry, you can do so only by deleting and then reversing the entry.
- If you are using the QuickBooks Online Plus version, you need to view the additional column for class and location.
Within a short period, QuickBooks has been able to make quick inroads into the Indian market. Many successful businesses have embraced it and found it highly reliable and user-friendly. It has provided highly advanced yet safe accounting solutions to numerous small and medium businesses. Hope this blog would help you learn multiple ways to Record Journal Entries in Quickbooks Online. Hope it would make your business accounting tasks much simpler.