Adjusting Journal Entries in QuickBooks Online: A Complete Guide
adjusting journal entries (AJE) in QuickBooks involves providing clear, step-by-step instructions for users, along with helpful insights. Here’s how you can enhance an article on adjusting journal entries:
What are Adjusting Journal Entries?
Adjusting Journal Entries (AJE) are unique entries used by accountants to correct minor errors or adjust account balances. These adjustments ensure the financial statements reflect accurate information at the end of the accounting period. AJE helps in recording unclassified transactions, allocating expenses, or correcting discrepancies.
In QuickBooks Online Accountant (QBOA), AJE plays an important role in fine-tuning your client’s books. If you use QuickBooks, this guide will walk you through how to create, review, and run reports to adjust journal entries.
Steps to Enter Adjusting Journal Entries in QuickBooks Online
- Sign In
Open QuickBooks Online Accountant (QBOA) and sign in to your account. - Access Client’s Company File
Select the “Go to QuickBooks” dropdown. Choose the specific company file where you want to make adjustments. - Create a New Journal Entry
Navigate to the “+ New” button.
Select Journal Entry. - Mark the Entry as Adjusting
When creating the journal entry, tick the Is Adjusting Journal Entry? checkbox to ensure it’s classified correctly as an adjustment. - Record the Adjusting Entry
- Date: Select the date of the adjustment.
- Accounts: Choose the correct accounts that need adjustment (e.g., prepaid expenses, depreciation, or accrued liabilities).
- Debit and Credit: Enter the appropriate amounts for each account to ensure the entry balances.
- Save the Entry
After completing the adjustment, select Save and Close.
Review Adjusting Journal Entries in QuickBooks
To make sure everything aligns correctly, it’s important to review the adjustments through an Adjusted Trial Balance Report. Here’s how:
- Open Adjusted Trial Balance Report
In QuickBooks Online, search for Adjusted Trial Balance in the search bar or navigate through the Reports menu. - Customize the Report
Use the Customize option to tailor the report based on your needs—filter by date, account, or specific transactions. - Review Balances
This report will show all account balances before and after the adjustments. Ensure the total debits equal the total credits.
Best Practices for Making Adjusting Journal Entries
- Common Adjustments
Accountants usually make adjustments for:- Prepaid expenses: Adjust when a portion of the prepaid amount is used (eg, prepaid insurance or rent).
- Depreciation: Allocate depreciation on assets monthly or annually.
- Accruals: Record expenses incurred but not yet paid (e.g., accrued salaries).
- When to Use AJEs
Adjusting entries are usually made at the end of the accounting period To ensure accurate financial statements. For example, correcting over- or under-accrued expenses or moving revenue from deferred to earned. - Balance Check
Always double-check that the debits and credits balance, and the entries reflect what has happened during the accounting period.
Key Tips for Adjusting Entries in QuickBooks
- Errors in Categorization: Adjusting journal entries can help correct any misclassified transactions from the original entry.
- Avoid Overuse: Frequent adjustments can indicate recurring issues with categorization, so use them carefully.
- Check Permissions: Adjusting journal entries are only available in QuickBooks Online Accountant; they won’t be available in regular QuickBooks Online editions like Simple Start, Essentials, or Plus.
Conclusion
Mastering the ability to adjust QuickBooks Online journal entries is essential to keeping your clients’ financial records accurate. By following these guidelines, you can effectively correct any errors, allocate expenses, or adjust accounts, leading to more accurate financial reporting. For best results, always review your adjustments with the Adjusted Trial Balance Report.