QB Issue Resolution:
You almost never need to use a JE in QB and not for the operational tasks.
They are find for Depreciation, or for Loan balances that need to be corrected into/out of Interest expense, for example. They are fine for rebalances of Equity.
“I only do them for items that cannot be entered right into the books. ”
But nearly everything can be done “right in the books.” Anything that should have a Name or Item associated should not be done on JE, in most cases.
“A cash withdrawal entered directly into the checking register and coded to the appropriate acct (i.e., travel, meals). ”
If you look at the Transaction TYPE, this is no different than using a Check. Working in the register does not make this a JE. It just means they want to use the Splits button in lieu of the full check view; it also means they are bypassing the items tab.
“The other individual journal entries the withdrawal from the bank over to petty cash and then codes it to the accts.”
There is no reason to use JE for this, and every reason not to. For instance, from Checking to Cash bank can be done as Check, Deposit or even Transfer function. The Use of that money is a “check” from the Petty Cash account, no differently than a debit card entry in the real checking account.
At least they posted the amount to a Petty Cash bank, first.
“The cash was not placed in the PC acct; it went right toward the expenses.”
Oh, oops. The taking of Cash does not always Exactly match how it was spent, and it typically is not spent all in one place. The Taking as Cash needs to flow INTO a cash account, for accurate allocation of How that gets spent, by individual transaction.
As we say in my class, “Cash is Real Money, too!”
“Is this just a different style of bookkeeping?”
This describes someone who is “old school” and not understanding that they are using a Program with Functionality = An interface = Tools for everything they are doing manually.
We hardly need to know or use debits and credits; we use the tools. Checks, Deposits, Invoices, Bills, etc.
“What is the rule of thumb for doing journal entries?”
It’s almost easier to point out where NOT to use them.
Not for AR, AP, Inventory, Payroll, Sales, Sales taxes, Vendor Bills; not for anything that needs a Name associated; not for anything that needs Due Date management; not for anything that should be done using an Item; not for Job tracking; no ability to use Qty, Cost AND Price for the same activity; not for discounts and markups; no need, for Banking and credit cards.
There are a few advanced uses for JE; for example, to accrue payroll as Other Liability and then reversing it, NOT using any payroll functionality or names, but just as a generic accounting value.
Resolution for Issue 'Journal entries rule of thumb' available: Yes (Solved).
Source: Intuit Community forum.
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