Fix Uncategorized Income in QuickBooks Online

This article addresses how to resolve uncategorized income issues in your books within the QuickBooks Online platform.

There are really different options to choose from when dealing with resolving uncategorized income in your books; this article will address one specific popular method.

Here is a scenario:

You have received a check payment from a customer, but the customer did not send to you a corresponding payment voucher that tells you precisely where to apply this check payment. So, to resolve the issue temporarily due to internal cash control purposes, you decide to go ahead and post this income receipt in your books, but you choose to post this to a general “uncategorized income” account and NOT the customer’s accounts receivables account.

Then, about a week later, the customer finally does indeed email to you a payment voucher for this previous check payment.

So, now, here is how you fix this issue in your books:

  1. Go to the customer’s profile in your books and apply this payment to the actual invoice or invoices listed on the payment voucher.
  2. VERY IMPORTANT STEP: Be sure, as you are applying the payment, to choose the “Undeposited Funds” account listed in your bank accounts to choose from within this “Received Payment” function. In this way, the payment will NOT go to the bank register, but instead go to that temporary holding account called “Undeposited Funds”.
  3. Now, go to your “Uncategorized Income” account and find that previous income deposit posting you made last week to the “Uncategorized Income” account and open it up.
  4. VERY IMPORTANT STEP: You will now see TWO line-item entries here, the top entry is that new payment application you just posted (per the payment voucher) and the bottom entry is that generic “Uncategorized Income” posting from last week. To resolve, simply delete the bottom entry and be sure the top entry is now check-marked.
  5. Save & Close
  6. Verify your cash reconciliation is still true.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.

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