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How Does QuickBooks Attached Documents Handle Security?

Chief Mechanic · March 19, 2011 ·

QuickBooks Attached Documents Manage Users
QuickBooks Attached Documents addresses the need for security by providing 4 levels of application permissions across 8 areas of QuickBooks functionality under an account overseen by a single user.

Users log into Intuit’s secure servers using an email address and password. While we’re on the subject of security, there’s one small drawback: the password is not case-sensitive and is therefore not considered a strong password.

A QuickBooks Attached Documents subscription is managed by a Company Administrator, the sole pre-defined role supported by the service. A user with the role of Company Administrator can:

  • Edit the business profile
  • Add other Attached Documents subscriptions
  • Update the current subscription

Here’s a screenshot of the screen to add a new user, which shows the range of security settings. After a user is added, security settings can be modified by clicking on the Manage Users button in the upper right of the browser screen, followed by editing a specific user. You can only manage users from a browser-based interface, not from within QuickBooks itself. The Setup and Manage Users menu selection will only open browser access to Attached Documents.

Quickbooks Attached Documents Add User

The service supports 4 levels of application permissions:

  • Administrator: can perform all functions and manage users
  • Full Access: can perform all functions but cannot manage users
  • View Only: can view any attachment in any area but cannot add new attachments and cannot modify or delete existing documents
  • Custom Access: controlled access across 8 functional areas

Necessarily, the user with the role of Company Administrator must have Administrator application permissions, but other users can have Administrator application permissions as well. While those users will have powerful capabilities, they won’t have the powers specific to the role of Company Administrator, such as editing the company profile.

The Custom Access permission is used to control access to documents in functional areas of QuickBooks. Custom Access supports 8 functional areas:

  1. Sales and Accounts Receivable
  2. Purchases and Accounts Payable
  3. Checking and Credit Cards
  4. Time Tracking
  5. Payroll and Employees
  6. Inventory
  7. Sensitive Accounting Activities
  8. Company Documents

Within these 8 areas, there are 4 capabilities:

  • Add: this is a global permission; if a user can add an attached document, he can add it to any area
  • View: this permission allows a user to look at but not modify or delete a document
  • Modify: this permission necessarily includes the View permission
  • Delete: this permission is only available to a user with Modify permissions in the same area

Users assigned a Custom Access level can make use of their capabilities (i. e., Add, View, Modify, or Delete) on lists and transactions associated with that area of accounting. A user can be assigned to more than one area, a necessity in a small firm that still wants to set some restrictions on document access.

Before examining how Custom Access applies in specific areas, it’s important to understand how access to files in the Document Inbox is controlled. Any user with View permission in any area can see all unattached documents in the Document Inbox. Custom Access can’t take affect until after a document is attached and put into a specific area. Therefore, for documents requiring controlled access, care must be taken to start the upload process by attaching them from within QuickBooks. If you elect to upload a document to the Document Inbox and attach it later, it is viewable by any user with View permissions until it is attached to a list item or transaction.

8 Functional Areas

Let’s review which lists and transactions are associated with specific areas. Note that a list or transaction type can appear in more than 1 area. For example, the Other Names list appears in both the Sales and Accounts Receivable and the Purchases and Accounts Payable areas.

Sales and Accounts Receivable: Customers, Other Names, Fixed Asset Item List, Estimates, Sales Orders, Invoices, Sales Receipts, Credit Memos, and Payments.

Purchases and Accounts Payable: Vendors, Other Names, Fixed Asset Items, Bills, Bill Credits, Bill Payments, Credit Card charges, Credit Card credits, and Purchase Orders. Note that Checks – which represent a different transaction type – cannot be seen unless the user has View permissions in the area of Checking and Credit Cards.

Checking and Credit Cards: Vendors, Other Names, Fixed Asset Items, Checks, Deposits, Credit Card charges, and Credit Card credits. Note that users with View permission can see documents attached to transactions in bank or credit card accounts but cannot see documents attached to the bank or credit card accounts themselves. Note also that Transfers are not included in this area.

Time Tracking: Other Names and Timers.

Payroll and Employees: Employees, Other Names, Paychecks, Payroll Liability Checks, Liability Adjustments, and Year-To-Date Adjustments.

Inventory: Items, Vendors, Other Names, Fixed Asset Items, Bills, Bill Credits, Bill Payments, Purchase Orders, Item Receipts, Inventory Adjustments, and Build Assemblies.

Sensitive Accounting Activities: Accounts, Journal entries, and Transfers. Note that users with View permission can see documents attached to general ledger Accounts, but to also see documents attached to transactions in a particular area, View permission for that area is required. For example, to view a document attached to a Check, a user must have View permissions in the Checking and Credit Cards area.

Company Documents: Documents attached to the company file itself via the Company Information window.

This last area is not an accounting function similar to managing A/R or A/P. Instead, it includes more general corporate documents that are connected to accounting and recordkeeping. Documents here include those attached to the Company Information via the Company->Company Information… menu selection. A screenshot of this point of attachment is shown below. Examples of documents that might be attached here include corporate organization documents such as articles of incorporation, bylaws, or meeting minutes.

QuickBooks Attached Documents Company File

A few examples of how applying security in QuickBooks Attached Documents will illustrate the power and flexibility of this security model. First, consider the need to upload bank statements but to restrict access to selected individuals. Bank statements attached to the Account are only viewable by users with access to Sensitive Accounting Activities, so the specific bank account to which the statement applies is the best point of attachment. We don’t recommend bank statements be attached to other list entities, such as Other Names, because documents attached to those lists are accessible to other areas.

Next, consider the need to upload payroll tax forms. If every user requiring access to the payroll tax forms will also have access to the Sensitive Accounting Activities area, one good point of attachment might be the liability account to which the tax form relates. Another approach might be to treat these forms as Company Documents, and attach them to the Company Information. A workable but slightly less desirable method would be to create employees representing the tax agency as placeholders and attach tax forms to the relevant placeholder employee. However, even though a tax form is often accompanied by a payment to a Vendor, we don’t recommend attaching a tax form to a Vendor because documents attached to that list item would be accessible to other areas, such as Purchase and Accounts Payable.

Both of these examples illustrate an important concept in making use of security in Attached Documents. Start by attaching a document to an area with the greatest restrictions and only attach it to other areas as required. If you attach a document to areas that include lists or transaction types that overlap, you may end up making the document available to a wider audience than you originally intended.

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How Can I Close Transactions With a Customer Who Is Also a Vendor Who Only Paid the Net Balance On an Invoice?

Chief Mechanic · September 13, 2010 ·

For some businesses, another firm is both a customer and a vendor.  If you’ve invoiced that firm (as a customer) while they have billed your company as a vendor, they may opt to pay the net amount owed for simplicity and to preserve their own cash balance.  In that case, you’ll need to find a way to process the net payment and at the same time close both the customer invoice and the vendor bill.

In QuickBooks, there are 2 methods to accomplish this:

  1. Use a clearing Bank account
  2. Use General Journal entries

We favor the second method because it’s more consistent with normal workflow and it more fully documents the transactions recorded.  To mirror Intuit’s own discussion of these methods in their knowledge base article on this topic, we’ll follow their example transaction, where your firm has invoiced a customer/vendor for $100, and that customer/vendor has billed your company $75.  We’ve given this customer/vendor a name, Newco Llc.  QuickBooks doesn’t permit identical names in lists.  For that reason and to better distinguish between the customer account and the vendor account, we’ve appended “(customer)” and “(vendor)” to the company’s name.

Method 1 – Use a Clearing Bank Account

This method involves creation of a clearing account (if you don’t already have one set up) and recording the vendor credit through the Make Deposits function.  Screen shots that illustrate what takes place in important steps follow the description of the steps.

  1. Create a new Bank type account, which in our example is named Clearing Bank Account
  2. Receive the payment from your customer/vendor to pay the customer/vendor’s outstanding invoice in full, which in our example is a payment of $100, and select Undeposited Funds as the Deposit To account if it’s not already set to that by default
  3. Click on the Banking->Make Deposits menu selection and select the payment you recorded in Step 2 in the Payments to Deposit window and click Ok
  4. In the Make Deposits window, add a new line item and enter the customer/vendor’s vendor account in the Received From field, your Accounts Payable account in the From Account field, and the amount of the vendor bill that the customer/vendor deducted from his payment as a negative number, which in our example is -75
  5. Add a second new line item and enter the customer/vendor’s customer account in the Received From field, the bank account to which you’ll deposit the customer/vendor’s net payment, and the amount of the net payment as a negative number, which in our example is -25
  6. Set the Deposit To account to the clearing account created in Step 1, which in our example is the Clearing Bank Account and click Save & Close or Save & New to record the net deposit
  7. Click the Vendors->Pay Bills menu selection and select the customer/vendor’s bill to be paid
  8. Once the bill is selected, click the Set Credits button, choose the vendor credit that you created in Step 4, and click Done to return to the Pay Bills window
  9. Set the Account from which to issue the payment to the clearing account, which in our example is the Clearing Bank Account, and click the Pay Selected Bills button
  10. QuickBooks will display the Payment Summary window, advising you that the bill was paid by a credit only, so it won’t be associated with a bill payment check; click Done to complete paying the vendor bill

In a typical use of the Make Deposits function where there is 1 entry for the deposit amount from Undeposited Funds as a positive number, QuickBooks credits (reduces) Undeposited Funds and debits (increases) the bank account selected in the Deposit To field.  Positive amounts on the Make Deposits window represent credits; negative amounts represent debits.  Thus, Accounts Payable is debited (reduced) by the amount of the vendor bill that the customer/vendor deducted from his payment, and the regular bank account is debited (increased) by the amount of the net payment received from the customer/vendor.  Intuit incorrectly describes the entry made in Step 5 as a credit; it’s not – it’s a negative amount, so it’s a debit.

After completing Step 6 above, you’ve recorded the net amount of the deposit to your regular bank account.  Note that the Deposit Subtotal made to the clearing account is 0.00, reflecting its purpose to serve purely as a clearing account to close transactions.  QuickBooks will not allow setting the From Account to your Undeposited Funds account when recording the net amount being deposited in Step 5.  If you combine this deposit item with others, you’ll complicate reconciling your regular bank account.  That’s why it’s a good idea to make each customer/vendor transaction processed through the clearing account a separate deposit.  The need to separate deposits is one limitation of the clearing account method.

QuickBooks Premier 2009 Clearing Bank Account Make Deposit
QuickBooks Premier 2009 Clearing Bank Account Checking

After selecting the vendor bill in Step 7, you’ll be able to apply the credit that you created in Step 4 by clicking the Set Credits button.

QuickBooks Premier 2009 Clearing Bank Account Pay Bills 1

In the Discounts and Credits window, select the credit.

QuickBooks Premier 2009 Clearing Bank Account Discounts

After selecting the credit, there are no other credits available.  The total of the bills to be paid is 0.00.

QuickBooks Premier 2009 Clearing Bank Account Pay Bills 2

As described in Step 10, QuickBooks will display the Payment Summary window.  However, because the bill was paid entirely by a credit, it won’t be associated with a bill payment check, even one with a zero amount.  The vendor’s balance will be reduced by the amount of the payment and the bill will be marked Paid, but there won’t be a transaction recording the payment in the vendor’s transaction list in Vendor Center.  The fact that the transaction list in Vendor Center presents an incomplete record of what was recorded is another limitation of the clearing account method.

QuickBooks Premier 2009 Clearing Bank Account Payment Summary

Because there’s no bill payment check to delete or void, if you want to undo this process, you’ll need to start by deleting the deposit from the clearing account.  That will leave funds in the Undeposited Funds account and return the vendor bill to an unpaid or open status.

Method 2 – Use General Journal Entries

This method involves making 2 General Journal entries and then processing the customer/vendor’s net payment in your normal workflow.  Screen shots that illustrate what takes place in important steps follow the description of the steps.

  1. Click on the Company->Make General Journal Entries… menu selection and record a debit (decrease) to Accounts Payable for the amount of the vendor bill that the vendor/customer deducted from his payment, which in our case is $75; in the Name field for the debit, enter the vendor account name
  2. On the same General Journal entry, enter a credit for an equal amount to another account, such as the expense account used on the vendor bill, and click the Save & New button
  3. Enter a second General Journal entry with a credit for $75 to Accounts Receivable, and in the Name field for the credit, enter the customer account name
  4. On the same General Journal entry, enter a debit for $75 to the same account you used in Step 2 and click the Save & Close button
  5. Click on the Customers->Receive Payments menu selection and enter the customer account name in the Received From field; after doing so, you’ll see the message that this customer has available credits
  6. Click the Discounts & Credits… button to apply these credits
  7. In the Discounts & Credits window that appears, select the credit for $75 that you recorded in Step 3 and click the Done button to return to the Receive Payments window
  8. Select the customer invoice being paid and enter the net amount paid by the customer/vendor, along with other payment information such as the Pmt. Method and Check #
  9. Click Save & Close or Save & New to record the customer payment

The account you enter in Steps 2 and 4 doesn’t matter as long as it’s the same account, because the debits and credits reverse each other.  In fact, if you already have a clearing account set up, you can simply use that clearing account in these steps.  These 2 General Journal entries are an effort to post a debit to Accounts Payable and a credit to Accounts Receivable.  Because QuickBooks imposes a restriction that only 1 Accounts Payable or Accounts Receivable account can appear on a General Journal entry, it’s necessary to make 2 entries.

Here are the 2 General Journal entries:

QuickBooks Premier 2009 Vendor Customer 1
QuickBooks Premier 2009 Vendor Customer 2

Here’s the process at Step 5:

QuickBooks Premier 2009 Vendor Customer 3
QuickBooks Premier 2009 Vendor Customer 4

And finally, here’s our completed Receive Payments screen just before saving the transaction:

QuickBooks Premier 2009 Vendor Customer 5

We favor the second method – using General Journal entries – for 2 reasons.  First, after completing these steps, you can process the customer/vendor’s check with other checks in your Undeposited Funds account as you normally would.  You won’t need to make a separate deposit for each payment from a customer/vendor in order to maintain your bank reconciliation process as you would if you used the clearing account method.  Second, because General Journal entries appear on the transaction list in both the Customer Center and Vendor Center, you’ll have a well-documented trail of what took place.  On the vendor account, you’ll see a bill for $75 and a General Journal debit for $75 that pays the bill; on the customer account, you’ll see the $100 invoice, the $75 General Journal credit that reduced the amount owed, and the $25 payment.  In contrast, in the clearing account method, you’ll only see the vendor bill marked Paid.  You won’t see the transaction that actually paid the vendor bill, which can lead to confusion after the details of how the transaction was recorded are forgotten.

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How Do I Record the Sale of a Fixed Asset On a Lease?

Chief Mechanic · September 12, 2010 ·

If you’ve already accounted for a leased asset as a fixed asset, you’ve accounted for that asset as a capital lease, sometimes called a finance lease, as opposed to an operating lease.  We’ll assume that the capital lease determination is correct and proceed from that point.

Capital leases impact a firm’s balance sheet, and the gain or loss from the disposition of these items flows through to the income statement.  However, the gross amount from the sale of fixed assets is not revenue or income and should not be recorded in accounts that record results from operations.

Let’s imagine a company with a computer that had an original cost of $1000 and has accumulated depreciation of $500.  The company is selling the computer for $200 and will use the $200 to reduce the lease liability.  In effect, the firm has a computer that has a net carrying cost of $500 ($1000 cost less $500 accumulated depreciation) that is being sold for $200, or a loss of $300.  Conceptually, here are the journal entries that should be made:

Step 1: Record the Asset Sale

General Journal Entries for Sale of Leased Asset Step 1

Step 1A: Record the Asset Sale and Use Make Deposits Window to Record the Cash Receipt

General Journal Entries for Sale of Leased Asset Step 1a

Step 2: Record Using the Sale Proceeds to Repay the Lessor

General Journal Entries for Sale of Leased Asset Step 2

Step 1 removes the computer (the fixed asset) from the balance sheet and reverses the accumulated depreciation against that asset.  It also records the cash receipt and the resulting loss.  If you elect to enter the cash receipt in the Make Deposits window (Banking->Make Deposits), you would select your computer asset account as the From Account.  In that case, since QuickBooks would automatically debit cash for $200 and credit your asset account by $200 (of the $1000 total), you’d make the alternate journal entries in Step 1A to complete recording the asset sale.  Note that the “Loss on sale of assets” account is an Other expense account.  To create an account of this type, use the Other Account Types selection and choose Other expense from the pull down menu.

The journal entries in Step 2 do not need to be directly entered.  Those are the journal entries that QuickBooks will create when a check is written to the lease liability account.

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Do Deposits Appear In a Center, Such As the Customer Center?

Chief Mechanic · September 11, 2010 ·

Deposits don’t appear in a Center, such as the Customer Center under normal circumstances.

The 3 Centers (Customer, Vendor, and Employee) only include transactions where the transaction source matches the Name shown in the Center.  For a Deposit, a customer is not considered the transaction source.  Instead, it’s the target.

Sources and targets are an important concept in QuickBooks.  For more information, see our article on sources and targets.

If you record a Deposit via the Make Deposits window, the source is the bank account.  Even if you enter a Name in the Received From field, that Name is associated only with targets, not the source.  There’s no way to assign a source Name in the Make Deposits window.

However, if you open the Register for the bank account to which the funds were deposited, you can edit the Name assigned to a Deposit.  Under normal circumstances, a Deposit could be made up of funds from multiple Names, so QuickBooks doesn’t assign a Name to the Deposit.

The first 2 entries on the screenshot below are typical deposits where no Name was assigned.  The third entry is a Deposit made via the Make Deposits window but where we’ve edited the Name in the bank account register to include a Customer:Job name.  This edited Deposit does appear in the Customer Center for that Customer:Job, as shown below.

While it’s technically possible to make a Deposit appear in a Center, we don’t recommend it.  A Deposit made up of funds from multiple Names can never be made to appear in a Center for more than 1 Name, since only 1 Name can be assigned to the source.  That makes expecting Deposits in a Center very unreliable – something that is never a good idea for an accounting system.

QuickBooks Enterprise Solutions 10 Deposit In Center
QuickBooks Enterprise Solutions 10 Deposit In Center 2
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What Are Sources and Targets?

Chief Mechanic · September 11, 2010 ·

Sources and targets are important concepts to understand reporting in QuickBooks and use of the Advanced Find function.

Sources and targets are terms assigned by Intuit to describe transactions.

In most instances, the source of a transaction is the summary or total of the transaction.  For example, the source of a check includes the amount of the check, the payee, and the bank account from which the check was written.  The target of a transaction is the distribution of the source into 1 or more other accounts.  For example, a check might be used to pay expenses in 2 different General Ledger accounts, which appear on the Expenses tab below the check payee information.  The targets of this check include the information on these 2 lines.

A transaction can have 1 source and 1 or more targets.  In most instances, the source is equal to the sum of the targets.  Forms or windows in QuickBooks determine what information will be the source and what will be the target.  Your only control over what is the source or target is what you enter (subject to validation) in the appropriate area of the form.  In the check example below, the top part of the check form is always the source, and the bottom part always contains the target information.  However, don’t extend too far the thought that the “sources are on top of the form and targets on the bottom.”  That only applies to A/R & A/P transactions.

General Journal Entries are one important exception to the discussion of sources and targets.  The first line of a general Journal Entry is the source, and all other lines are targets.  Depending on how one enters a general journal entry, the source may not be equal to the sum of the targets.  Since you have direct control over the order of lines in a general journal entry, you do control what the source and targets are for general journal entries.

Payments, statement charges, and transfers don’t follow the model that the source is on the top of the form and targets on the bottom.

Here are the source and targets for QuickBooks transaction types:

  • Invoice: A/R is the source; income accounts associated with the line items are the targets
  • Bill: A/P is the source; expense accounts on the line items are the targets
  • Deposit: The Deposit To account is the source; the accounts on the line items are the targets
  • Payment: The Deposit To account is the source; A/R is the target

To learn the source and targets for any transaction, click the Journal button or use the keyboard shortcut Ctrl + Y.  The source is the first line listed.  The targets are the lines listed after the source.

QuickBooks Enterprise Solutions 10 Check
QuickBooks Enterprise Solutions 10 Check Transaction Journal

In this example, the source is the first line of the report that shows the payee and check amount.  There is 1 target, the second line that contains the distribution information.  We’ve added Source Name as an additional column to the standard Transaction Journal report to better illustrate sources and targets. Note that the Name field for the target is the Customer:Job name, but the Source Name is the check payee.  Reports that show target information won’t show the check payee in the Name field.

That leads to confusion among QuickBooks users that aren’t familiar with sources, targets, and the type of information that appears on a report.  A report that shows check information in an expense account is reporting target information.  The report is not indicating that a check was written to the information shown in the Name field.

According to Intuit:

  • sources and targets are database concepts and have nothing to do with debits or credits
  • a source can be a debit or credit, just as a target can be a debit or credit
  • most reports display a mixture of source and target data
  • the Inventory Valuation Summary and Inventory Valuation Detail reports are examples of exceptions in that they display only target data

This Intuit knowledge base article offers additional information on sources and targets.  When reading it, don’t forget the general journal entry exception to statements about sources and targets.  Some of the statements in Intuit’s own materials don’t repeat that exception, and they’re only true with that exception noted.

Issues involving confusion about sources and targets are fairly common.  To address these issues, Intuit also offers explanations of the source and target data sets, the report set, where reports get their data, and how conflicting report filters produce unexpected results.

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