AccuraBooks My client, Amy, uses the QuickBooks Online platform for her basic bookkeeping needs, including sending invoices to her customers and processing payroll for her employees.
I log into the client’s QuickBooks Online company file monthly to reconcile her bank and credit accounts and review important reports such as current Accounts Receivable Aging, Income Statement and the Balance Sheet. We look into various helpful reports and lists for disparities and issues such as:
- Uncleared deposits
- Uncleared or unmatched employee paper paychecks
- Very old past due Accounts Receivable balances
- Negative Accounts Receivable balances
- Relevant Chart of Accounts usage
- Customer payments still sitting in the Undeposited Funds account
- Comparing accrual vs. cash-based reports
Some of the continuing bookkeeping issues we find, and the corresponding resolutions we use for this client are listed below.
- Issue: Employee paychecks do not match with cleared paper checks from the bank account.
- Reason: The client is processing paychecks in the payroll module but writing the actual check for a different amount. This is because the written check includes a reimbursement, such as for fuel costs.
- Resolution: I enter a separate check for the fuel reimbursement and then reconcile the written bank check (that cleared) with both the net wages paycheck and the fuel reimbursement check in QuickBooks Online.
- Reason: The client is processing paychecks in the payroll module but writing the actual check for a different amount. This is because the written check includes a reimbursement, such as for fuel costs.
- Issue: Old customer payments are sitting in the Undeposited Funds account.
- Reason: Sometimes the client is entering customer payments (against invoices/pledges) for the sole reason of closing out the invoice/pledge. In reality, the customer payment was received some months prior, but was booked directly to an income account (and not applied to the open invoice/pledge).
- Resolution: There is a double-dipping revenue situation here, so one resolution is to simply void both the uncleared customer payment and corresponding invoice (and keep instead the direct income deposit). Still, depending on the situation, we may choose to resolve this issue by keeping the customer invoice with corresponding payment, delete the (direct to income) deposit, and replace it with the customer payment. The reconciliations will stay intact with either resolution, if done correctly.
- Reason: Sometimes the client is entering customer payments (against invoices/pledges) for the sole reason of closing out the invoice/pledge. In reality, the customer payment was received some months prior, but was booked directly to an income account (and not applied to the open invoice/pledge).
- Issue: Negative balances in the Accounts Receivable Aging report.
- Reason: Occasionally, the client receives more money (from a pledge) than what was invoiced. The client, however, is still booking this overpaid amount to the original invoice/pledge.
- Resolution: QuickBooks Online will still automatically book this overpayment portion as income (Unapplied Cash Payment Income), however this extra income account created by QuickBooks Online will look out of place on your Income Statement. Depending on the situation, we may simply modify the original invoice with an extra line item (to increase the amount equal to the overpayment), then simply apply the overpaid amount to this modified invoice. An alternative resolution is to change the payment amount equal to the original invoice and then add the overpayment as a separate line item within the actual bank deposit.
- Reason: Occasionally, the client receives more money (from a pledge) than what was invoiced. The client, however, is still booking this overpaid amount to the original invoice/pledge.
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.