Sunday, September 27, 2009

QuickBooks: The Ask Advisor Equity Account

A client asked: Since every transaction requires assignment to an account, what is the best practice for handling tricky transactions that I am not sure about?

The best approach is to create an “Ask Advisor” Equity Account. Depending on your level of accounting and QuickBooks experience, you may often need to record transactions that you are unsure of which account you should use. In fact, to record the transaction you might even need to create a new account.

Since you cannot record the transaction without assigning an account, you need to choose something in order to continue with the data entry. However, if you guess and post to an incorrect account, the transaction becomes buried in the General Ledger and will appear on account-based transaction detail reports.

Instead, create a new account with an Equity type called “Ask Advisor” You can choose whatever type of account you like, but it is best to select an account with a Balance Sheet type (like Equity) so you can use the account register to easily edit the transactions in the future to assign the correct account.

Arrange regular meetings with your QuickBooks Advisor to help you to clear the balance in this account. The transactions you post to “Ask Advisor” could have a significant impact on your financial reports, affecting the way QuickBooks measures your financial performance and how you manage your company, so don't wait under the end of the year to meet with your QuickBooks Advisor.

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