How to Make a Journal Entry in QuickBooks Online

Creating journal entries in QuickBooks Online is crucial for your business's financial management. Journal entries let you record transactions that may not fit standard forms, adjust balances, and keep your books accurate. Let's explore how to make a journal entry effectively.

First, it helps to know when to use journal entries. Here are three main reasons:

• Adjusting Entries: These are used to correct mistakes or update account balances at the accounting period's end.
• Recording Non-Cash Transactions: This includes things like depreciation or amortization that don’t involve cash exchange.
• Transferring Balances: This can happen between income and expense accounts or between asset, liability, and equity accounts.

Now, let’s go through a step-by-step guide to create a journal entry in QuickBooks Online:

1. Access the Journal Entry Feature:

- Log into your QuickBooks Online account.
- Click on the "+ New" button on the left menu.
- Select "Journal Entry" under the "Other" section.

2. Enter the Journal Entry Details:

- Set the date for when the transaction happened.
- QuickBooks will automatically assign a journal number but you can change it if necessary.

3. Add Accounts and Amounts:

- On line one, select the right account from the "Account" dropdown.
- Depending on the transaction, enter the amount in the "Debit" or "Credit" column.
- On the next line, choose the opposite account and enter the same amount in the opposite column. This ensures that your entry is balanced. QuickBooks will notify you if there’s an imbalance.

4. Add Descriptions and Memos:

- Use the "Description" field for context about each line item.
- In the "Memo" field, add further notes for future reference.

5. Assign Names (Optional):

- If relevant, you can assign the transaction to a specific customer, vendor, or employee using the "Name" field.

6. Review and Save:

- Carefully check your entries for any mistakes.
- Choose either "Save and new" if you want to create another entry or "Save and close" to finish.

Best Practices:

• Use Sparingly: Only use journal entries for transactions that can’t be recorded via invoices or bills.
• Understand Debits and Credits: It’s vital to know how these affect your accounts to keep accurate records.
• Consult an Accountant: If you’re unsure, get advice from a professional to avoid mistakes.

By following these steps and keeping these best practices in mind, you can effectively create journal entries in QuickBooks Online. This will help you maintain accurate financial records.