Learn how to make journal entries in QuickBooks Online to record financial transactions that can’t be automatically entered. Journal entries allow the user to input debits and credits manually in to the system. This is similar to earlier accounting systems. Journal entries may be used to correct errors, or to depict the depreciation of an asset. They may also be used in order to transfer money between an income and an expense account. Journal entries are considered to be an advanced feature of QuickBooks Online. In this article, we discuss the process to make journal entries in QuickBooks, and some aspects related to it.
To maintain accuracy in your financial statements, the user needs to ensure that there is a credible record of credits and debits. This will ensure that the accounts remain balanced. If the user consistently keeps track of the credits as well as debits, it will ensure that the accounts are balanced.
The accounting system may be envisaged as a journal. The journal is responsible for tracking all the transactions done by the user, and each transaction shall be posted as a journal entry.
What are journal entries in QuickBooks?
Before we come to the process to make journal entries in QuickBooks, we need to be clear on the meaning of a journal entry. QuickBooks is automated to record transactions in the sequence of their occurrence. For instance, whenever there is an invoice, sales receipt etc, QuickBooks inputs this data in to the general ledger. However, if the user wishes to enter a transaction on their own, they will need to make journal entries in QuickBooks.
In case the user needs to purchase a vehicle with $10,000 cash, there would be two corresponding aspects to the journal entry. There would be a debit towards the vehicle account, as well as a credit to the cash account for $10,000.
There might be situations when the user requires to enter a transaction by themselves. This might be when they are trying to rectify an error in data entry that has been made. When a journal entry is made in to QuickBooks, it must be counterbalanced by a corresponding debit.
Understanding the process to make a QuickBooks journal entry
Follow the below mentioned steps to make journal entries in QuickBooks Online:
- The user needs to navigate to the concerned section, which allows them to make journal entries in QuickBooks Online. Upon pressing the +icon on the top right of the file, a certain menu will drop down titled “Create”. Here, under the sub section “Other”, there shall be an option “Journal Entry” in the right most column. After pressing “Journal Entry” the user needs to navigate to the entry itself to enter the relevant information.
- After this, the journal date needs to be edited. It is the default tendency of the QuickBooks system to input the current date. Consequently, if the user is entering a journal entry from an earlier time period, it is their responsibility to duly enter the correct date. Following this, the user needs to enter the journal number.
- The next step is to enter the correct accounts in the “Category” column. For each QuickBooks journal entry, there will always be two accounts, one pertaining to the credit and the other to the debit.
- Thus, two accounts need to be added in the category column. The first account, from the chart of accounts, will be the one losing money. On the other hand, the second account will be the one that is gaining money.
- Once the correct accounts have been entered, the user needs to fill in the corresponding debits and credits. The journal entry will obviously impact the books, or the general ledger. In case the user is entering multiple payments with their entry, they would need to ensure that debits and credits are equal at the end of the entry.
- A QuickBooks journal entry is a good testament to the
principle of double entry accounting – when something is debited, something else will be credited. The final step for completing the QuickBooks journal entry is to add a description. After filling in the journal entry, the user can save it and close it. Irrespective of whatever transaction is being entered in to QuickBooks Online, it may be envisaged that a journal entry is going on.
- After the user has understood how to make journal entries in QuickBooks, there are some other actions that need to be quickly discussed as well. Find the instructions as mentioned below:
How to reverse a journal entry
This would be necessary when the user has made a mistake while trying to make journal entries in QuickBooks Online.
For this, the user would need to go to the Chart of Accounts. The Chart of Accounts may be opened by clicking on the Settings icon, which is in the form of a gear. This will be located under “Your Company” heading.
At the Chart of Accounts, find the account for which an entry has been created. From the action column, press on View Register. From here, the user needs to search for the relevant journal entry.
Once the user presses the Edit button, the Journal Entry page with the specific journal entry data will open up. In order to reverse the journal entry, press on the Reverse button which is located at the bottom of the page.
How to delete a journal entry
While it is possible to delete a journal entry that has been made by mistake, the user should exercise caution that they do not end up unbalancing their accounts.
For deleting a journal entry, the user needs to go to the Chart of Accounts, and look for the concerned account. Following this, they need to locate the journal entry in the register. Once they expand the journal entry, a Delete button should be visible. Pressing on this should delete the journal entry.
How to make journal entries in QuickBooks that are recurring in nature
In order to create a recurring journal entry, the user needs to start a new journal entry. In the form for Journal Entry, they need to press the Recurring button at the bottom. This will transform the page in to a Recurring Journal Entry. By using this form, the user can cause the journal entry to appear on any schedule as desired.
In case you are unclear on how to make journal entries in QuickBooks, it makes sense to peruse this blog. By following the steps mentioned here, the user will find it quite easy to make and record journal entries in QuickBooks Online. It is essential that the user be familiar with this process, even though QuickBooks performs this function on its own. The process can be useful, if in case a mistake needs to be edited, or a transaction needs to be manually entered. Thus, we have discussed not only how to make journal entries in QuickBooks, but also how to delete or reverse them, and how to make journal entries in QuickBooks that keep recurring.