Configuration & Preferences

Should I Use Account Numbers In My General Ledger?

Chief Mechanic · September 7, 2010 ·

We think you should use account numbers in your general ledger, but we think it’s more important that you’re consistent in either using them correctly or not using them at all.

To use account numbers, you need to enable that preference by visiting the Edit->Preferences menu and clicking on the Company Preferences tab of the Accounting submenu, which is shown below.

QuickBooks Premier 2009 Preferences Use Account Numbers

Once the account number preference is enabled, you’ll be able to manually assign account numbers to your general ledger accounts. QuickBooks won’t automatically assign them for you or insure that your numbers follow a consistent structure. It will insert the account number before the account name, and you’ll then be able to quickly locate accounts by typing the first few characters of an account name or the first few digits of the account number.

When assigning account numbers, use numbers that:

have a consistent length
have multiple unused integers between numbers to accommodate changes to your general ledger
follow a consistent structure

New businesses or companies installing QuickBooks for the first time are more likely to make changes to their general ledgers, so it’s especially important for these firms to have the flexibility to add or change account numbers.

In older versions of QuickBooks, account numbers were a way to re-arrange the order of accounts rather than having an account list in alphabetical order based on the account description. Since you can now drag accounts in your chart of accounts list to rearrange the order, account numbers no longer serve that purpose. Account numbers are primarily a tool to organize account numbers outside of QuickBooks, such as in Excel, and to improve the readabilty of your account list.

Intuit recommends the following ranges for assigning account numbers:

10000 to 19999 Assets
20000 to 29999 Liabilities
30000 to 39999 Equity or Capital
40000 to 49999 Income or Revenue
50000 to 59999 Cost of Goods Sold, Job Costs, or Project Costs
60000 to 69999 Expenses or Overhead Costs
70000 to 79999 Other Income
80000 to 89999 Other Expenses

QuickBooks organizes accounts on reports based on the account type, not the account number. Whether you follow this structure or another one of your own choosing is up to you. Just keep in mind that account numbers are another tool to help organize information. If you use account numbers but don’t use them in a way that results in a better organized chart of accounts, you’re actually worse off.

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What Is the Closing Date and How Do I Set It?

Chief Mechanic · September 6, 2010 ·

The Closing Date in QuickBooks is a setting that indicates the date through which your books have been closed. Normally, books are considered closed after they’ve been reviewed, all adjusting entries have been made, and reporting has been completed to investors, lenders, or tax authorities.

It’s used to protect data from inadvertent modification by making it more difficult – but not impossible – for you to change or delete transactions on or before the closing date. Unlike other accounting systems that require you to close your books and make it impossible to add, change, or delete transactions in closed periods, QuickBooks offers the flexibility for you to restrict access to periods you or your accountant have determined are closed and to later remove that access restriction, a process commonly called “re-opening your books.”

It’s important to understand that setting a Closing Date doesn’t result in recording any transactions; QuickBooks automatically makes certain adjustments, such as increasing your Retained Earnings account by the amount of your prior year’s net income on the first day of your fiscal year. The Closing Date is only an access restriction. You can control how strict that restriction is by whether you set a Closing Date Password.

To set the Closing Date, click on the Accounting sub-menu of Edit->Preferences… menu selection and choose the Company Preferences tab. You’ll see the current Closing Date, if any.

QuickBooks Premier 2009 Preferences Closing Date

Click on the Set Date/Password button to view the Set Closing Date and Password window.

QuickBooks Premier 2009 Preferences Set Closing Date

Like many functions in QuickBooks, there are multiple ways to get to this same point. The Company->Set Closing Date… menu choice will take you to the window to make this setting. You can also click on the Company->Set Up Users and Passwords->Set Up Users… menu selection, followed by clicking on the Closing Date… button.

QuickBooks Premier 2009 User List Closing Date

With either method, you’ll end up at the the Set Closing Date and Password window.

You can set or change your Closing Date and the Closing Date Password on this window. If you attempt to enter any transaction with a date on or before the Closing Date, QuickBooks will display either a warning or a confirmation window, depending on whether you set a Closing Date Password. If you set a Closing Date Password, you’ll have to first correctly enter it to record the transaction.

Here’s the warning you’ll see when attempting to record a transaction dated on or before the Closing Date if you do not enter a Closing Date Password:

QuickBooks Premier 2009 Closing Date Warning

You’ll still be able to record the transaction by clicking Yes. The access restriction is simply forcing an extra step.

Here’s the more strict limitation you’ll see when attempting to record a transaction dated on or before the Closing Date if you do enter a password:

QuickBooks Premier 2009 Closing Date Password

You’ll have to correctly enter the password to record the transaction, so the access restriction is greater.

Since only the QuickBooks Administrator or a user with External Accountant privileges can set QuickBooks preferences, it’s not possible for users without those higher privileges to first remove the Closing Date or change the Closing Date Password to bypass the access restriction. That insures that, when combined with user restrictions, the Closing Date restrictions are effective.

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How Do I Clear the Closing Date or Re-Open My Books?

Chief Mechanic · September 6, 2010 ·

Since the Closing Date is only an access restriction, sometimes you may find a need to clear or remove the Closing Date to permit you to record prior period transactions. Typically, this isn’t done to record a small number of transactions, because those transactions can be recorded by over-riding a warning or correctly entering the Closing Date Password. It’s done when it’s later discovered that a sufficiently large number of prior period transactions need to be recorded, and the access restriction slows this process unnecessarily. Removing the access restriction after you’ve previously set it is a process commonly called “re-opening your books.” For example, you may need to re-open your books to prepare an amended tax return.

To clear or remove the Closing Date, click on the Accounting sub-menu of Edit->Preferences… menu selection and choose the Company Preferences tab. You’ll see the current Closing Date.

Click on the Set Date/Password button to view the Set Closing Date and Password window.

Simply delete the date in the Closing Date field and click Ok.

(+6 rating, 6 votes)

How Do I Enable Automatically Invoicing Customers For Reimbursable Expenses?

Chief Mechanic · September 1, 2010 ·

The first step to automatically invoice customers or clients for reimbursable expenses is to set a QuickBooks preference.

For more information on handling reimbursable expenses, see our related articles on what distinguishes a reimbursable expense from other expenses, invoicing a customer for reimbursable expenses, removing expenses from the list of billable expenses to be invoiced to a customer, and finding out which reimbursable expenses haven’t been billed to a customer.

Click on the Edit->Preferences menu selection to open the Preferences window. On the Company tab, click on the Time & Expenses sub menu. Be sure that under the Invoicing options block, the preference to Create invoices from a list of time and expenses is checked. This preference must be set before entering vendor bills for which you plan to seek reimbursement from a customer or client by issuing an invoice.

QuickBooks Premier 2009 Preferences Time & Expenses Invoicing

If you select the preference Track reimbursed expenses as income, then the income – but not the markup – associated with billing a customer for each reimbursable expense can be sent to a specific income account as discussed below.

If you don’t specify an income account for each expense account, the income associated with invoicing a customer for a reimbursed expense will be sent to the expense account itself. The Default Markup Percentage is the percentage that the reimbursed expenses will be marked up. If your markup is a positive percentage – that is, you’re charging your customer more than the actual expense to account for administrative or handling charges – the markup is sent to the Default Markup Account. The amount charged to a customer excluding the markup is either sent to an income account you specify or to the expense account.

If you specify a positive Default Markup Percentage, QuickBooks will automatically create a new Item in your Item List – a Group named Reimb Group. With a positive markup, QuickBooks will automatically subtotal reimbursable expenses on an invoice and display the markup and the total of the markup and the reimbursable expenses themselves.

For each General Ledger Expense account that you’d like to match to a corresponding Income account, edit the General Ledger account by clicking on the Company->Chart of Accounts menu selection or using the keyboard shortcut Ctrl + A. Select the Expense account you’d like to match to an Income account and edit the account by clicking on the Account button at the bottom of the Chart of Accounts window or using the keyboard shortcut Ctrl + E. Click the checkbox for the Track reimbursed expenses in Income Acct. setting and specify the Income account in the pulldown list.

QuickBooks Premier 2009 GL Add Account Track Reimbursed

You must assign a different Income account to each Expense account. Otherwise, you’ll receive this warning:

QuickBooks Premier 2009 General Ledger Warning 7

Enabling the preference and setting the relationships between income and expense accounts for reimbursable expenses is just the first step in automatically invoicing customers or clients for these types of expenses. Other steps include marking expenses as reimbursable, finding uninvoiced reimbursable expenses, and removing an expense from the list of those to be billed to a customer.

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What Distinguishes a Reimbursable Expense From Other Expenses?

Chief Mechanic · September 1, 2010 ·

A reimbursable expense is an expense that you expect to invoice to a customer or client either at the actual cost or with a markup. QuickBooks includes features to distinguish reimbursable expenses from other types of expenses and to track which reimbursable expenses have in fact been invoiced to a customer.

For more information on handling reimbursable expenses, see our related articles on enabling automatically invoicing customers for reimbursable expenses, invoicing a customer for reimbursable expenses, removing expenses from the list of billable expenses to be invoiced to a customer, and finding out which reimbursable expenses haven’t been billed to a customer.

In QuickBooks, the 4 principal ways to record expenses for a business are:

Recording a vendor bill using the Vendor->Enter Bills menu selection
Writing a check using the Banking->Write Checks menu selection or Ctrl + W keyboard shortcut
Recording a credit card transaction using the Banking->Enter Credit Card Charges menu selection
Via a General Journal entry using the Company->Make General Journal Entries… menu selection

When you record an expense using 1 of these 4 methods, you can associate line items on the transaction with one or more Customer:Jobs. Doing so will enable you to analyze both the expenses as well as the revenues from a job.

When you add a Customer:Job to a line item on a check, vendor bill, credit card charge, or General Journal entry, QuickBooks will automatically put a check mark in the Billable? field. That check mark in the Billable? field indicates this is a reimbursable expense to be invoiced to a customer or client. If it’s not, simply remove the check mark by clicking on it.

Unfortunately, there’s presently no way to set the default for the Billable? field to being unchecked for those organizations who want to simply assign expenses to customers and not seek reimbursement. Leaving this field checked won’t interfere with associating expenses with customers; it’s an important detail if your organization does want to use it to track reimbursable expenses. In either case, with a Customer:Job associated with the line item for the expense, you’ll be able to use QuickBooks to perform job profitability analysis, more commonly known as job costing.

The screens for each of the 4 principal ways to record an expense are shown below. Here’s the Enter Bills window:

QuickBooks Premier 2009 Enter Bill Reimbursable Expense Tab

The Write Checks window:

QuickBooks Premier 2009 Write Checks Billable

The Enter Credit Card Charges window:

QuickBooks Premier 2009 Enter Credit Card Charge Billable

And the Make General Journal Entries window:

QuickBooks Premier 2009 Make General Journal Entries Billable

Note that the field where you enter the Customer:Job on the Make General Journal Entries window is actually called Name because General Journal entries can be recorded for an entity that isn’t a Customer:Job, such as a Vendor, Employee, or Other Name.

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Configuration & Preferences

Accounting

Developer

Intuit