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bill/bill credit

How Do I Produce a Report of Vendor Purchases?

Chief Mechanic · September 10, 2010 ·

Let’s assume that vendor purchases include both purchases of inventory and expenses paid.  With that assumption, there no simple report to address all situations.  Finding the right report depends on the information you want to include on the report.

QuickBooks provides 2 reports that include vendor purchases: the Purchases by Vendor Detail Report and the Purchases by Vendor Summary Report.  Both of these reports can be found on the Reports->Purchases menu.

These reports are a simple way to identify vendor purchases, but they contain an important limitation: the reports only include purchases recorded on the Items tab of bills, checks, and credit card charges.  They do not include transactions recorded on the Expenses tab or payroll-related expenses.

Another approach is to use the Expenses by Vendor Detail Report or the Expenses by Vendor Summary Report, found on the Reports->Company & Financial menu.  However, this approach also contains a limitation: it only includes transactions sent to a general ledger expense account (whether or not the transaction was entered on the Items or the Expenses tab), not vendor purchases of inventory, which are additions to assets.

Vendor purchases (both purchases of inventory and expenses paid) are not the combination of the Purchases by Vendor and the Expenses by Vendor reports.  That’s because it’s possible to enter a transaction on the Items tab where the amount is sent to a general ledger expense account based on the account for that Item.  As a result, such a transaction would appear on both reports, and combining the values on these reports would result in double-counting.

Yet another approach is to start with a Custom Transaction Detail Report (or the Summary report if only summary totals are required) and to filter the report for certain transaction types.  At the simplest level, filter the report by Transaction Type and choose Multiple Transaction Types from the pull down.  When the Select Transaction Types window appears, select Check, Credit Card, Bill, CCard Credit, and Bill Credit.  Those selections will capture vendor purchases by check, bill, or credit card, net of all credits.

QuickBooks Enterprise Solutions 10 Vendor Purchases

With that 1 filter applied, this report is a comprehensive list of purchases by vendor.  However, the report includes the payment side of each transaction, and there is no easy filter setting to restrict which accounts appear on the report and avoid the risk that a vendor purchase in that account would be missed.

Which approach is best suited to identify vendor purchases ultimately depends on the how transactions are entered in QuickBooks and the information sought after on the report.

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What Is the Closing Date Exception Report and How Do I Create It?

Chief Mechanic · September 6, 2010 ·

The Closing Date Exception Report in QuickBooks shows all transactions sorted by transaction type (e. g., Bill, Check, Invoice) dated on or before the Closing Date that were first recorded or modified after that date was established.  To add to its utility as an audit tool, it also includes the User Name of the user that recorded the transaction in the Last modified by column.

To produce this report, click on the Reports->Accountant & Taxes->Closing Date Exception Report menu selection.  Here’s a sample of the report:

QuickBooks Premier 2009 Closing Date Exception Report

The report begins with the changes to the Closing Date itself, followed by a list of transactions sorted by transaction type.  To change the settings for the Closing Date Exception Report, click the Modify Report… button:

QuickBooks Premier 2009 Closing Date Exception Report Display Tab

The Report Date Range refers to the transaction date itself.  As shown above, the report will include all applicable transactions dated up to and on the Closing Date.  The From field is blank because this setting looks backward to include all transactions.

The Days Entered / Last Modified refers to the actual date on which you performed this accounting task.  The To field is blank because this setting looks forward to include all transactions added or modified after the Closing Date.

By default, Show Deleted Transactions is checked, but you can uncheck this setting to exclude deleted transactions from the report.

Because changes to prior periods after they’ve been closed must be done with extreme care, this report is primarily an audit trail to quickly identify what transactions were recorded and by whom.

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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:

  1. Recording a vendor bill using the Vendor->Enter Bills menu selection
  2. Writing a check using the Banking->Write Checks menu selection or Ctrl + W keyboard shortcut
  3. Recording a credit card transaction using the Banking->Enter Credit Card Charges menu selection
  4. 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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How Do I Invoice a Customer for Reimbursable Expenses?

Chief Mechanic · September 1, 2010 ·

In order to easily invoice a customer or client for reimbursable expenses, you first need to make sure your QuickBooks installation is properly configured for this task.  Your configuration depends on how you intend to account for reimbursable expenses.

For more information on handling reimbursable expenses, see our related articles on enabling automatically invoicing customers for reimbursable expenses, what distinguishes a reimbursable expense from other 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 addition, note that a key preference setting to enable the approaches discussed in this article is not available in QuickBooks Pro. See our article on the feature differences between QuickBooks Pro and Premier for more information. That means QuickBooks Premier is required to use these methods.

There are 2 general approaches to account for reimbursable expenses:

  1. record the amount your vendor bills you in an expense account and the amount you invoice the customer or client in an income account
  2. record the amount your vendor bills you in an expense account and the amount you invoice the customer or client as an offset to this same expense account

The first approach allows you to track both the revenues and the overall level of expenses for that account; it’s the preferred method, especially if you charge customers more than the amount of the corresponding vendor bill.  The second tracks only the net level of expenses for that account.  It’s a simpler method used by some firms that bill a customer the exact amount of a corresponding vendor bill and monitor the balance of a general ledger account to track reimbursable expenses for which a customer has not yet been invoiced.

For either method, the first step is to set a QuickBooks preference to enable you to easily create invoices for reimbursable expenses.  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

Setting this preference and the role of the other preferences in the Invoicing options block are discussed more fully in our article on enabling automatically invoicing customers for reimbursable expenses.

The remainder of the steps to invoice a customer or client for reimbursable expenses depends on the method you choose to account for such expenses.  The first 2 methods record the expense and revenue separately; the third method records the revenue as an offset to the expense account.

Method 1 – Record Both the Expense and Revenue Separately With An Optional Markup

If you select the preference Track reimbursed expenses as income as shown in the above screenshot and assign a different Income account to each General Ledger Expense account for which you want to track reimbursable expenses, you can record both the expense and revenue associated with reimbursable expenses in different accounts.

To use this method after you’ve enabled the preferences and made your account assignments, record vendor bills on the Expenses tab of the Enter Bills window.  Enter an Expense account for which you’ve matched an Income account and enter a Customer:Job.  The Billable? checkbox will be selected by default once you enter a Customer:Job.  Click the Save & Close or Save & New button to record the bill.

QuickBooks Premier 2009 Enter Bill Reimbursable Expense Tab

Click on the Customers->Invoice for Time & Expenses menu selection to display a list of all customers with unbilled reimbursable expenses.  This menu selection only appears if you correctly set the preference described earlier.  To produce an invoice for the reimbursable expenses for a customer, select that customer’s name and click the Create Invoice button.  If you want to selectively invoice for reimbursable expenses, click the Let me select specific billables for the Customer:Job checkbox before clicking the Create Invoice button.

QuickBooks Premier 2009 Invoice for Time & Expenses 2

Click on the Expenses tab to select the unbilled expenses for this customer.  On the Choose Billable Time and Costs window, you can change the Markup Amount or % and the Markup Account used for this transaction.  If you enter a % in the Markup Amount or % field, QuickBooks will treat your entry as a percentage; otherwise, it will be treated as a dollar amount to be added to the expense cost as markup.  Click the Ok button to add these expenses (including the markup) to the customer invoice.

QuickBooks Premier 2009 Choose Billable Expenses

There are 2 advantages to this method:

  1. The description you record with the vendor bill is the description that will be included on the customer invoice 
  2. You can choose to markup billable expenses by a default percentage or override that default with a different percentage or a fixed dollar amount

If you expect that the description you enter with the vendor bill will appear on a customer invoice, it will be easier to record an accurate description for the reimbursable expense while you’re recording the vendor bill.  The limitation to this method is that you have to create a matching Income account for each Expense account for which you will record reimbursable expenses.  If you have a large number of Expense accounts that require matching Income accounts, expect to add a large number of accounts to your Chart of Accounts.  In addition, by recording reimbursable expenses on the Expenses tab, there is no Item associated with the expense, so they won’t be included on Item-based sales reports, such as the Sales by Item Summary or Sales by Customer Detail reports.  On balance, though, the combination of connecting the expense description to the customer invoice and the flexibility to manage the markup for reimbursable expenses makes this method the preferred approach to record and invoice for these expenses.

Method 2 – Record Both the Expense and Revenue Separately Using Items

You can also record both the expense and revenue from reimbursable expenses separately using the Items tab of the Enter Bills window.

First, make sure you have created a General Ledger Income account to track reimbursable expenses.  In this example, our account has an Account Type of Income.  It’s for Reimbursed Freight & Delivery and, since it’s for just 1 type of reimbursement income,  it’s is a Subaccount of our more comprehensive Reimbursement Income account.  Likewise, create a corresponding expense account that you want to associate with this other income.  You should have a general ledger income and expense account for each type of reimbursement income you want to track at the financial statement level.

QuickBooks Premier 2009 GL Edit Account Reimbursed

Create an Item with a Type of Other Charge for each reimbursable item type for which you’ll invoice your customers.  Check the box to indicate This item is used in assemblies or is a reimbursable charge.  Doing so will allow you to record both the Income Account and Expense Account for this Other Charge Item.  Otherwise, you’d only be able to enter an Income Account.  The Income Account should be set to the Income account you created to track for your revenue from this type of reimbursable expense; the Expense Account should be set to the corresponding expense account.  In this example, we’ll use the Freight Reimbursement item.

QuickBooks Premier 2009 Edit Item Other Charge Reimbursable

That completes the preliminary steps to invoice a customer for reimbursable expenses.  Now, we need to record the vendor bill.  In order to track both the revenue and expense for reimbursable expenses, you need to enter vendor bills on the Items tab, as shown below.  Enter the standard vendor bill information, but keep in mind that the Memo or Description will not make their way to your customer invoice.  Instead, the description on the customer invoice will come from the definition of the Item, which in our example is Freight and Delivery Reimbursement.

Click the Items tab.  Enter the Other Charge Item you previously created for this type of expense, which in our example was Freight Reimbursement.  To associate this bill with a customer or job, update the Customer:Job field.  When you do, the Billable? column will be checked by default.  Click either Save & Close or Save & New to record this transaction and save your work.  In this example, we’ll record a $100 expense for overnight delivery and associate it with a specific customer, Balak.

QuickBooks Premier 2009 Enter Bill Reimbursable Item

Click on the Customers->Invoice for Time & Expenses menu selection to display a list of all customers with unbilled reimbursable expenses.  This menu selection only appears if you correctly set the preference described earlier.  To produce an invoice for the reimbursable expenses for a customer, select that customer’s name and click the Create Invoice button.  If you want to selectively invoice for reimbursable expenses, click the Let me select specific billables for the Customer:Job checkbox before clicking the Create Invoice button.

QuickBooks Premier 2009 Invoice for Time & Expenses 1

The Create Invoices window will appear with the reimbursable expenses you selected already filled in.  On that screen, click Save & Close or Save & New to record the invoice for those reimbursable expenses.  If you need to change what reimbursable expenses are being invoiced, you can click the Add Time/Costs… button to change which reimbursable expenses are included.

Another approach to billing for reimbursable expenses is to simply to start customer invoicing from the usual menu selection, Customers->Create Invoices, and enter the Customer:Job.  If that Customer:Job has outstanding billable time or costs, you’ll this window:

QuickBooks Premier 2009 Billable Time

If you make the Select the outstanding billable time and costs to add to this invoice? selection, you’ll see the Choose Billable Time and Costs window, where you can choose which costs you’d like to include on this invoice.

QuickBooks Premier 2009 Choose Billable Expenses

Unfortunately, you’ll need to check each of the 4 tabs to see under which tab the expenses appear, because until you actually select an expense (as we’ve done in the screenshot above), QuickBooks displays zero dollar amounts.  The dollar amounts displayed are the selected dollar amounts – not the available amounts.

With this method, the description of the actual expense is not connected to the description that appears on a customer’s invoice.  For some businesses that want to control the information that appears on a customer’s invoice, this is the preferred method because it insures that a consistent expense description appears on every customer invoice.  However, this approach does not automatically calculate a markup.  The customer invoice will automatically be completed with the actual expense cost, not the actual cost plus a markup.  Adding a markup or changing the expense description would require manually changing the invoice line item after completing the steps described above.

Method 3 – Record the Revenue as an Offset to the Expense Account

Some firms that don’t markup reimbursable expenses opt for a simpler approach of sending both the debit from the vendor bill and the credit from the customer invoice to the same account.  This approach enables a firm to monitor the balance in that account to verify that all reimbursable expenses have been invoiced to a customer.  If the account has a debit balance, some customer invoices haven’t been recorded.  If you don’t match an Income account to the Expense account for which you invoice reimbursable expenses as described in the first method, you’ll end up with the result of this approach – except that your markup will be sent to a different General Ledger account.

Under this method, after setting the preference discussed above, record vendor bills normally from the Vendors->Enter Bills menu selection.  On the Enter Bills window, record required vendor bill information, but be sure to record a Memo for the transaction.  Like the first method, the Memo you record will become the description on your customer invoice.  On the Expenses tab, choose your general ledger account number for this expense.  To make this expense a reimbursable expense, associate it with a Customer:Job by updating that field.  After doing so, the Billable? field will be checked by default.  Click Save & Close or Save & New to record the transaction.

QuickBooks Premier 2009 Enter Bill Reimbursable Expense

As discussed above, click on the Customers->Invoice for Time & Expenses menu selection to display a list of all customers with unbilled reimbursable expenses.  Choose the customer you are invoicing for reimbursable expenses, and click the Create Invoice button.  QuickBooks will display the Create Invoices screen for that customer, pre-filled with the Memo and amount recorded with the original vendor bill.

Under this method, the vendor bill recorded a debit to the expense account, and the customer invoice recorded an equal and offsetting credit.  This approach generally is not recommended if the amount you charge customers for reimbursable expenses is greater than what your vendor bills you.  If you do elect to use this method, it’s a good idea to have a separate expense account for non-reimbursable expenses of the same type.  This allows you to monitor the balance in a separate reimbursable expense account, which should reach a $0 balance when all vendor bills and customer invoices are recorded.

When accounting for reimbursable expenses, keep in mind that if you delete or void the customer invoice for reimbursable expenses, the reimbursable expense remains marked as having been billed.  To change that status, you’ll need to modify the Billable? field in on the vendor bill.

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