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Treating a credit card statement as one big transaction

Kevin Harris - Tuesday, December 21, 2010

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

This is the first 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.

 

Treating a credit card statement as one big transaction.

The average bookkeeper waits for that credit card statement to come in the mail, then goes to “Write Checks” or “Enter Bills”, and itemizes the entire statement within one singe transaction. At the end of the day the accounting is not incorrect, as you have your credit to cash (write checks) or payables (enter bills) and your debit to the various expense accounts. However, what happens when you need to produce a balance sheet for your boss mid-month? Clearly any credit card balances will be non-existent until that monthly statement hits your desk. This can cause short-term cash projections, amongst other stats, to be skewed. How about reports by vendor? You cannot specify a vendor on the split lines of a transaction in QuickBooks, therefore none of your credit card charges will have vendor names attached.

 

Solution: Use “Enter Credit Card Charges” to create individual transactions for each and every credit card purchase/credit. When you get the monthly statement, immediately “Reconcile” the credit card account. At the end of the reconciliation process, QuickBooks prompts you to create the check/bill.

 

***QuickTip to save time…

If you haven’t already, start making use of the Online Banking feature in QuickBooks… stay tuned for a future blog entry on how to set it up and use it efficiently

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