QuickBooks newcomers who enter transactions for the first time are sometimes mystified by what looks a bit strange. They write a check and see an offsetting deposit appear right below the check in the register. They enter a credit-card charge and see a matching payment beneath. They create an invoice and see all of its line items show up as checking-account deposits. “What am I doing wrong?” they wonder.
QuickBooks uses double-entry accounting—the worldwide standard for business accounting. In double-entry accounting, every transaction records in at least two accounts—in one as a debit and in the other as a credit. Debits and credits affect different types of accounts differently. Debits increase expense and asset accounts but decrease income and liability accounts. Conversely, credits increase income and liability accounts and decrease expense and asset accounts.
Fortunately, in QuickBooks for Mac you rarely need to worry about how or what to debit or credit. You just need to understand that the two “sides” of every transaction go to two (or more) different accounts.
When you enter a deposit or check into a bank account’s register, you’ve already chosen one “side” of the transaction. (If you use the Make Deposits or Write Checks window, generally your default checking account shows in, respectively, the Deposit To or Bank Account field—i.e., the first “side.”) You need to supply the other “side” of the transaction by choosing the appropriate account (or accounts) in the Account field. Usually, you’ll choose income accounts for deposits and expense accounts for checks. Just make sure not to choose the bank account into which you’re entering the transaction, or you’ll see both sides offset each other in the register.
Credit card accounts
Credit-card transactions are similar. When entering a charge in the credit card’s register (or when using the Enter Credit Card Charges window), you’ll usually choose one or more expense accounts in the Account field. However, when writing a check to pay down the card’s owing balance, enter the check into the bank account’s register and choose the credit-card account in the Account field. Of course, if after reconciling your credit-card statement you entered a bill to pay later, then you won’t write a separate check; you’ll use Pay Bills instead to generate a Bill Payment Check.
Invoices are different. In QuickBooks for Mac, an invoice becomes a single entry in the Accounts Receivable register for a specific customer job. On the other “side,” each line item in the invoice’s columns appears in the account to which the item is assigned. If items from invoices show up in your checking account’s register as deposits, then you probably chose the checking account from the Account field drop-down menu when you set up those items. You need to assign all of your items (in your Item List) to appropriate accounts. Usually, you’ll use income accounts. (See Chapter 6, “Items: Your Products and Services,” from the QuickBooks 2010 for Mac user’s guide for complete information.)