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Failing to input deposits appropriately

Kevin Harris - Monday, December 27, 2010

The 5 Most Common QuickBooks Blunders … and solutions you can understand

This is the second entry in a series of five.

 

I have worked with over one hundred QuickBooks using businesses and individuals over the past two years.  Many QuickBooks users are doing themselves a disservice by continuing to use the system in ways that are causing more problems than not.  Here are the issues that I see on a regular basis, and painless approaches to ridding oneself of being ordinary.

 

Failing to input deposits appropriately.

Do you like to “Record Deposits” rather than “Receive Payments” when a customer pays an invoice? If so, you’ve probably noticed that one or more of the following is true of your QuickBooks data:

 

  1. Income is grossly overstated
  2. Invoices which have been paid still appear to be outstanding in the system
  3. Your receivables have gotten to the point where you laugh each time you look at a balance sheet
  4. Reconciling the deposits in your checking account is a mathematical challenge

Solution: I’ll keep this simple… when a customer gives you money to pay down an invoice that exists in QuickBooks, use “Receive Payments” to tie that payment directly to the invoice (the amount of the payment gets dumped into the asset account “Undeposited Funds”). Then when that payment, and hopefully others, makes its way to the bank, you “Record/Make Deposits” and lump any checks deposited together into one single transaction. If you’re depositing funds that are not to be linked to a customer invoice, skip the “Receive Payments” step. Follow these straightforward rules and your books magically start looking correct! No more chuckling at the balance sheet.

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