KnowledgeBase

What Item Types Does QuickBooks Support?

Chief Mechanic · August 23, 2010 ·

QuickBooks supports 11 Item Types.

Items themselves are maintained on the Lists->Item List menu selection, but the Item Types are pre-configured in QuickBooks and can’t be maintained by a user.

QuickBooks Enterprise Solutions 10 New Item

The 11 Item Types are:

Service
Inventory Part
Inventory Assembly
Non-inventory Part
Other Charge
Subtotal
Group
Discount
Payment
Sales Tax Item
Sales Tax Group

There is a 12th Item Type, Fixed Asset, which is maintained on the Lists->Fixed Asset Item List menu selection.

(+1 rating, 1 votes)

What Are Payment Methods?

Chief Mechanic · August 23, 2010 ·

As the name suggests, Payment Methods are a list of the ways by which a customer can make a payment. They’re maintained on the Lists->Customer & Vendor Profile Lists->Payment Methods menu selection as 1 of 9 profile lists for Customers & Vendors. This particular profile list is only used for Customers.

QuickBooks Enterprise Solutions 10 Payment Methods

A Payment Method can be one of 11 pre-defined Payment Types:

Cash
Check
American Express
Discover
MasterCard
Visa
Other credit card
Other
Debit Card
Gift Card
E-Check

These Payment Types are part of the QuickBooks program itself and can’t be maintained by a user.

The Customer’s Payment Method is specified on the Receive Payments and the Enter Sales Receipts windows, and payments are grouped by Payment Method on the Payments to Deposit window if you’ve opted to use the Undeposited Funds account.

If you have a lot of payments to deposit, you can opt to the filter the items on the Payments to Deposit window to only include 1 particular Payment Method. Therefore, you should create Payment Methods that match the way your customer payments are grouped into deposits.

QuickBooks Enterprise Solutions 10 Make Deposit Payment Methods

You can also specify a customer’s Preferred Payment Method on the Payment Info tab of the Edit Customer window.

QuickBooks Enterprise Solutions 10 Customer Preferred Payment Method

Payment Methods primarily serve the function of grouping related items on a deposit, so your firm’s approach to bank deposits should drive the methods you create and maintain on this list.

(+1 rating, 1 votes)

What Is a Payment Item and How Should I Use One?

Chief Mechanic · August 23, 2010 ·

A Payment Item is a type of Item maintained on the Item list, which is accessed on the Lists->Item List menu selection.

See our article on all of the Item types supported by QuickBooks for more information.

A Payment Item is used to record a partial payment on an Invoice or Statement made before the original sale. Payment Items shouldn’t be used on other sale documents, such as Sales Receipts or Credit Memos.

Payment Items are typically used by firms seeking the ability to create a single customer document (the Invoice) that reflects the net balance due on the grounds that a single document showing payments deducted reduces customer confusion and improves collections.

QuickBooks Enterprise Solutions 10 Payment Item

Typically, recording a customer payment via the Customers->Receive Payments window is used to record a full or partial payment received at or after the time of sale. Recording a Payment Item on an invoice is an alternate to this approach to reduce an invoice balance. One common use of a Payment Item is to record a deposit or retainer.

A Payment Item is designed to give you the flexibility to control the account to which it is deposited and to specify the associated Payment Method to enable the payment to be grouped with other similar items into a bank deposit. To specify the deposit account, either select Group with other undeposited funds or select Deposit To and pick an account from the pull-down list of accounts.

The screenshot below shows a Payment Item being recorded in the Create Invoices window. The Payment Item is recorded as a negative number and reduces the Balance Due on the invoice.

QuickBooks Enterprise Solutions 10 Payment Item on Create Invoice

One downside to using a Payment Item is that any reference number information, such as a customer’s check number, is not recorded in the typical field for such information, the No. field. Instead, the No. field is populated with the Invoice number.

For those who favor using a Payment Item, the advantage of being able to produce a single document (the Invoice) that reflects a customer’s net balance outweighs these shortcomings.

(+1 rating, 3 votes)

What Are Service Items and How Should I Use Them?

Chief Mechanic · August 23, 2010 ·

Service Items are one type of Item and are maintained on the Lists->Item List menu selection.

See our article on all of the Item types supported by QuickBooks for more information.

Generally speaking, Items are designed to pre-fill invoicing and purchasing forms. Service Items normally include charges for labor or professional fees that your firm buys or sells. You should use Service Items for those charges for labor and professional fees that you plan to included on invoicing and purchasing forms.

Once you’ve created a Service Item, you can’t change the type to another type of Item, so use care when choosing the Item Type.

The New Item window appears below. How you record values in these fields depends on whether you’re creating a Service Item that you purchase or an Item that you sell. Some fields only appear if you’ve set a preference.

If you’re creating a Service Item used in purchases, record your vendor’s unit price as the Rate and choose an expense account for the Account. If you’re creating a Service Item you sell, record your typical selling price as the Rate and choose an income account for the Account.

Since you’ll have a chance to change the Description on invoicing and purchasing forms, you can either leave the Description blank, enter the most common Description, or create different Service Items for each unique description. QuickBooks stores the actual description recorded on each line of every invoicing and purchasing form, so the Description you enter when recording the Item is only an aid to filling out a form.

If the Service Item is used in assemblies or performed by a subcontractor or owner, click the checkbox indicating This service is used in assemblies or is performed by a subcontractor or partner. Doing so will allow you to record both the revenue and expense for each Item in separate accounts. Such Items can be used on both sales and purchase forms.

QuickBooks Enterprise Solutions 10 New Item Subcontractor

When you’ve recorded all relevant fields, click Next to save your changes and enter another Item or click Ok to save your changes and close the window.

(+4 rating, 4 votes)

What Is the Undeposited Funds Account and Why Should I Use It?

Chief Mechanic · July 25, 2010 ·

The Undeposited Funds account is an Other Current Asset account that’s automatically created by QuickBooks to record funds received by a company that are not immediately deposited in a bank account.

When you record customer payments by clicking on the Customers->Receive Payments menu selection, you’re recording individual receipts. In actual practice, these individual receipts are grouped into a bank deposit that consists of funds from several customers. By using the Undeposited Funds account as a holding account, your accounting for customer receipts can match actual practice and simplify bank reconciliations. A customer receipt results in a debit to Undeposited Funds pending deposit in a bank account. Receipts from several customers can be grouped by clicking on the Banking->Make Deposits menu selection and selecting those receipts that make up the total deposit. Making a bank deposit in this manner results in a credit to the Undeposited Funds account and insures that the transaction recorded in your bank account register matches the actual deposit made to the bank. If customer receipts had not been first put in Undeposited Funds as a holding account, each individual receipt would appear as a deposit in the bank account register. That doesn’t match actual practice and complicates bank reconciliations because the amounts recorded in the bank register won’t match what appears on the bank statement.

In order to use the Undeposited Funds account, you first need to enable this preference. Click on the Edit->Preferences menu selection to open the Preferences window. Click on the Sales & Customers sub-menu on the Company Preferences tab and check the box on the Use Undeposited Funds as a default deposit to account. Note: Enterprise Solutions users will find this preference on the Payments sub-menu.

QuickBooks Premier 2009 Undeposited Funds Preference

To display the transactions in the Undeposited Funds account, first click the Lists->Chart of Accounts menu selection (or use the keyboard shortcut Ctrl + A). Double click on the Undeposited Funds account to display the register for that account. Alternately, you can select the account in the list and use the keyboard shortcut Ctrl + R or click the Activities button and choose Use Register on the pop-up menu.

QuickBooks Premier 2009 Undeposited Funds Register

You can safely rename the Undeposited Funds account that QuickBooks automatically creates without changing the function of this account. Likewise, simply assigning the name Undeposited Funds to an account won’t by itself cause it to behave like this special account. Depending on preference settings, QuickBooks creates and assigns special account types to certain general ledger accounts, and these special account type settings aren’t clearly marked in the program.

A common QuickBooks bookkeeping problem can occur if the Use Undeposited Funds as a default deposit to account is selected but deposits are not made using the Banking->Make Deposits function. In that situation, customer AR reports will be accurate because customer receipts have been recorded, but the bank balance will be inaccurate because those payments have not been grouped into bank deposits and recorded in the bank account. Examining the Undeposited Funds register will usually reveal the source of the problem. The Undeposited Funds account balance should only reflect those funds that have been received by a company but not yet deposited in the bank. If the account balance reflects an unusually high balance, that indicates that either funds aren’t being deposited in a bank account immediately – or that some of the required processing steps when using the Undeposited Funds account have been skipped.

(+11 rating, 15 votes)

KnowledgeBase

Accounting

Developer

Intuit