QuickBooks 2011: The Missing Manual

Reclassifications and Corrections

As you work with your QuickBooks file, you might realize that you want to use different accounts. For example, as you expand the services you provide, you might switch from one top-level income account to several specific income accounts. Expense accounts are also prone to change—when the Telephone account splits into separate accounts for landline service, wireless service, and Internet service, for example. Any type of account is a candidate for restructuring, as one building grows into a stable of commercial properties, say, or you move from a single mortgage to a bevy of mortgages, notes, and loans.

Reclassifying Accounts

Whether you want to shift funds between accounts because you decide to categorize your finances differently or you simply made a mistake, you’re moving money between accounts of the same type. The benefit to this type of general journal entry is that you only have to think hard about one side of the transaction. As long as you pick the debit or credit correctly, QuickBooks handles the other side for you.

Debits and credits work differently for income and expense accounts, and Figure 16-5 shows you how to set them up for different types of adjustments.

Accountants sometimes create what are known as reversing journal entries, general journal entries that move money in one direction on one date and then move the money back to where it came from on another date. Reversing journal entries are common at the end of the year, when you ...