QuickBooks 2005: The Missing Manual

Some Reasons to Use Journal Entries

Here are a few of the more common reasons that businesses use journal entries:

• Reassigning accounts. As you work with QuickBooks you might find that the accounts you created originally don't track your business the way you want. For example, suppose you started with one income account for all the consulting services you offer. Now you have three income accounts: one for income from designing consumer surveys, a second for income for conducting surveys, and a third for the money you make working the statistics to deliver the right results. To move income from your original account to the correct new account, you debit the income from the original account and credit it to the new account, as described on page 364.

• Correcting account assignments. If you assigned an expense to the wrong expense account, you or your accountant can create a journal entry to reassign the expense to the correct account. If you've developed a reputation for mis-assigning income and expenses, your accountant might ask you to assign any questionable transactions to uncategorized income or expense. Then, when she gets the file at the end of the year, she can create journal entries to assign those transactions correctly. You can verify that the assignments and account balances are correct by running a trial balance (page 385).

Note

If you enter a transaction by mistake in QuickBooks, you can delete it. Because most accountants prefer to keep records of all transactions, even ...