QuickBooks – How to Record Refundable Expenses


There are three ways to record refundable expenses in QuickBooks, but only two of them should be used. Here are specific details on each, with ideas you should use

Method 1 – The Expenses Tab / Expense Account Method: When Registering an Expense committed to the customer, click the Expenses tab Enter the Invoices screen. Select the appropriate expense account, select the appropriate client, and do not check the column with the invoice icon above (also labeled "Billable" in later versions of QuickBooks). Save the transaction. You can now generate an invoice for the customer and deposit it into the invoice after clicking on the Time / Costs button.

Details of the method behind the scenes: The use of this method results in the display of the expense account. credited when the invoice is generated for the customer. This reduces the expense account rather than increasing a sales / revenue account. If users wish – if users do not want the refunded expense to be recorded as income, this method should be used.

Method 2 – The Expenses Tab / Cost Account Method: Similar to Method 1, click the Expenditures tab of the Write Checks or Enter Invoices screen. the seizure of an expense for a client. Instead of selecting an expense account, select a COGS account. Then select the appropriate client. Unlike method 1, note that the column along the far right can not be verified.

Backstage details of this method: He creates non-refundable "unbilled costs". These are displayed in the unbilled costs report, but when you click the Time / Costs button in the Invoice screen, they do not appear in this window. In other words, they will remain, forever, in the unbilled costs report and can never be deposited in a customer's bill. For this reason, this method should never be used under any circumstances. If it is necessary to publish in a COGS account, follow method 3.

Method 3 – Methods of the Articles tab: Go to the Articles list and create a new article Other cost. Click on the box that says, "This item is used in the assemblies or is a refundable charge." This configures the item so that it can be used effectively on the screen Write Checks / Enter Invoices, and Invoice screen Fill in the item with the desired COGS account in the left box and the desired income account in the right box. other information if necessary.

Then, when writing checks or entering invoices for refundable expenses, instead of using the Expenses tab, click the Items tab and select the article you just created Fill in the correct amount, and do not place a check mark on the far right side Save the transaction

When billing to the customer, click on the button Time / Costs, and the item used above will appear Select it and QB place it on the customer's invoice. Save transaction

Backstage details of this method: When you use the item in the Write checks, Enter bills or Enter credit card charges screens, the amount will be posted to the account. COGS selected set up the article. When you use the item in the Invoice or Sale Receipt screen, the amount will be posted in the revenue account chosen during the configuration of the item.

This is the method to use if you take a markup on the refund. It adds the customer's refund to income, and is the only way to determine a gross margin without creating "unbilled costs".

This method can be difficult because one has to think about setting up the article. correctly. In the Edit Item screen, special attention should be paid to the posting of the correct COGS account on the Purchase Information side, as well as to the correct sales / revenue account on the Sales Information side. .

Another reason this method is difficult is that your company may want to display various income and COGS accounts for various refundable transactions. If this is the case, it will be necessary to establish individual articles, each personalized according to the accounts that they must publish.

Final Thoughts

Most people will probably follow Method 1, but some will want to follow Method 3. If you need more help to decide, ask for the opinion of a local accountant.


Source by Jennifer A. Thieme

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