Once Quickbooks is connected to the business accounts (bank accounts and credit cards), data from the bank is available to users in a queue. These transactions within the queue need to be coded properly (coded to the chart of accounts) and saved to the account registers. This data entry feature helps save time because much of the work is done for the accountant.
Rules can be set up in Quickbooks that allow transactions to be automatically entered from the bank queue directly to the chart of account register. The rules are criteria of a transaction that is set up in Quickbooks and when the data comes down from the bank, it will recognize the transaction and can automatically enter it into Quickbooks. Here is an example:
Bank transaction
from bank queue: Office Depot purchase $50.00
Rule: Office Depot purchases will be coded to Office supplies and enter the transaction automatically.
Result: All future Office Depot transactions from the bank queue will be coded to Office Supplies, with no effort from the accountant to record the transaction.
Note: Rules can work for expenses, deposits/cash receipts of sales, and liability payments to help streamline data entry.
Although rules can work well for some data entry situations, it can cause some problems. From our example above, Office Depot purchases coded automatically to office supplies may not be correct in some circumstances. Suppose a purchase at Office Depot is for a computer or office furniture. These items are assets, not expenses. But the rule established for Office Depot records everything to Office Supplies. This means accountants need to be diligent in recording transactions despite the use of rules used within their accounting software. This requires auditing of transactions and recoding to the chart of accounts if necessary.
Rules can be a very helpful tool when entering data within an accounting system. However, it is a good idea to monitor the rules setup and determine that they are capturing and recording data property to ensure the financial statements are correct.
LFC can help with Quickbooks Online and the establishment of rules for one's accounting system. Contact LFC using the contact feature from this blog.
