QuickBooks Online (QBO) ledger memo
When reading an accounting ledger report, we must check the ledger memo and the transaction date, ledger account, debit, and credit. Without the ledger memo, the report only tells us when, which account was involved, and how much was added or deducted, but it doesn’t give us a reason why we did it. Lacking information can lead to confusion, errors, and potential audits. We need the ledger memo to fill in the ‘why’ and ensure accurate and transparent financial data.
What is a ledger memo?
A ledger memo is a simple short note, a few words comprised of alpha, numbers, or abbreviations that the accountant understands. You do not need a lengthy paragraph explaining why you pay or receive; you need concise information of what and where to explain the why.
The ledger memo has to be straightforward, easy to understand, informative, and accurate. For example, you wouldn’t enter a ‘clear loan’ when paying an insurance premium, would you?
QuickBooks Online (QBO) ledger memo.
The description next to the category field in the QuickBooks Online (QBO) transaction (such as bill or payment) is for a ledger memo, and each row of accounts could have a specific memo. Let’s say you received your forwarder’s bill, the bill could have:
- Row 1: Shipping charges from the origin to the designated port.
- Row 2: Temporary warehousing
- Row 3: Local delivery to your warehouse
A specific ledger memo for each account would give the reader a cost breakdown, telling them why the cost was for.
The ledger memo for the balancing account, accounts payable for the bill, and bank for the payment are at the bottom of the transaction. You can enter the ledger memo for the balancing account in the memo field. If you leave it blank, the description/memo column for the balancing account in the ledger report will be empty.
Remember, an informative ledger memo is not just a few words. It’s a key that unlocks accurate and transparent financial records. Despite its briefness, like a six-word story, it tells a tale.