Most of the time, you don’t need to know double-entry accounting (Accounting Basics: The Important Stuff) to use QuickBooks. When you write checks, receive payments, and perform many other tasks in QuickBooks, the program creates transactions that unobtrusively handle the double-entry accounting for you. But every once in a while, these transactions can’t help, and your only choice is moving money around directly between accounts.
In the accounting world, these direct manipulations are known as journal entries. For example, if you posted income to your only income account but have since decided that you need several income accounts to track the money you make, journal entries are the way to reclassify money in that original income account to the new ones.
Although journal entries are the only solution for some tasks in QuickBooks, it’s best to use QuickBooks transactions instead whenever possible. By using transactions, your QuickBooks reports will contain all the info you expect, and you’ll have the financial details you need if the IRS starts asking questions.
The steps for creating a journal entry are deceptively easy; it’s assigning money to accounts in the correct way that’s maddeningly difficult for weekend accountants. And unfortunately, QuickBooks doesn’t have any magic looking glass that makes these assignments crystal clear. This chapter gets you started by showing you how to create journal entries and providing examples of journal entries ...