Category Archives: QuickBooks

Change of account type in QuickBooks Desktop accounting software

The account type of each account has to be correctly specified when you create it. QuickBooks uses the account type to form financial report; below is a sample structure of a Profit & Loss report.

Sales
Less: Cost of Goods Sold
————————–
Gross Profit

Less: Expenses
————————–
Net Ordinary Income

Add: Other Income
Less: Other Expenses
————————–
Net Income
————————–

The presentation of the report gets affected when a wrong account type used. For example, Transport allowance will group with Cost of Sales if you created it as a Cost of Goods Sold account type instead of Expenses; hence, affecting the Gross Profit. QuickBooks does allow the user to edit the wrongly created account type such as from Cost of Goods Sold to an Expenses account type but not from a Bank type to an Expense. You may have to pass journals to rectify the transactions when a mistake made on a non-editable account.

Change QuickBooks account type

You get a “You cannot change the type of a subaccount. It must be the same type as its parent account” warning message if you try to amend an account type of a subaccount. For example, Transport Allowance has accidentally created under Purchases (which is a cost of goods sold account), to change the type to an Expenses you need to remove Transport Allowance as a subaccount of Purchases first, then change the account type. You should not change the account type if it affects the previous year or prior month’s financial report which you have already filed; instead, you may consider reclassifying the account with a journal.

Traceability and accountability should be the priority before consider making any amendment to the account.

 

Home Currency Adjustment on Reckon QuickBooks

Reckon introduced multiple currencies feature in QuickBooks* version 2003, which is much earlier than intuit QuickBooks US and QuickBooks Canadian version but slightly after Intuit QuickBooks UK.

Although all are ‘QuickBooks’, the multiple currencies feature are different. There is a Home Currency Adjustment wizard built-in in Intuit QuickBooks but not the Reckon version. You have to use a home currency adjustment journal to revalue the foreign currency accounts in Reckon Accounts (aka Reckon QuickBooks).

Assuming the home currency is Singapore dollar and you have a foreign receivable of US dollar 33 thousand at an exchange of 1USD:1.38SGD and the rate has changed to 1USD:1,35SGD at the end of January. The Singapore dollar receivable value has dropped from 45,540 to 44,550, which gives an exchange loss of Singapore dollar 990.

Instead of manually calculating the exchange gain/loss adjustment, you can print an Unrealised Exchange Gain/Loss report from the Reports menu (under the Multicurrency report section) to find out the unrealised gains and losses to adjust.

QuickBooks unrealised exchange report

Then based on the Unrealised Exchange Gain/Loss report, record a home currency adjustment journal into QuickBooks.

The Unrealised Exchange Gain/Loss report shows only the total Singapore dollar value of each foreign currency account instead of each foreign currency debtor or creditor. Therefore, you need to create a dummy receivable and payable for each foreign currency. For example, you create a dummy debtor, USD AR Adjustment, and use it to adjust the US dollar accounts receivable account.

From the Company menu, select Make General Journal, check the Home Currency Adjustment checkbox at the bottom of the journal and record the journal in Singapore dollar. On the first line of the journal, select foreign currency accounts receivable account, enter the loss of 990 under the credit column and select USD AR Adjustment in the name column. Next, debit 990 to the Exchange Gain/Loss Unrealised account and save the journal.

QuickBooks home currency adjustment journal

You need to reverse the Home Currency Adjustment journal on the following month to allow QuickBooks to calculate the exchange gain/loss between the invoice and payment when payment received. You can either manually pass a reverse journal or open up the home currency adjustment journal which you did earlier and click the Reverse button located at the top of the journal. From the monthly Profit & Loss report, a positive value indicating a loss in exchange unrealised in January; and a negative in February reversing the January adjustment.

QuickBooks Reverse Journal

QuickBooks Profit and Loss

The latest version of Reckon Accounts is 2018, contact Reckon or us if you like to upgrade your existing Reckon QuickBooks or Reckon Accounts.

 

*Reckon Accounts is formerly known as Reckon QuickBooks.

QuickBooks warning message “The currencies of your account and customer/vendor must be the same”

If you are managing the book in multiple currencies, take note that only Bank, Accounts Receivable, Accounts Payable and Credit Card account type in QuickBooks can have multiple currencies, the rest of the account such as income, expenses, fixed asset, etc. are all in base currency (home currency).

You get an error of “The currencies of your account and customer/vendor must be the same” in entering bill when a wrong currency has applied to the account. For example, you are supposed to create an expense account which has a base currency by default but set the account type accidentally to bank type with foreign currency tagged. Now, if you use this wrongly created account in “Enter Bill” with a base currency supplier, you will get an error prompt that “The currencies of your account and customer/vendor must be the same”.

QuickBooks Enter Bill

You can record a foreign currency supplier bill with a base currency expenses in QuickBooks but not vice versa.