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Intuit

Basic banking concepts and common terminologies

Basic Banking refers to manually recording bank transactions in QuickBooks Desktop. Some of the most common terminologies associated with it are outlined here to assist you


ACH (Automated Clearing House) An exchange of electronic transactions between participating financial institutions in the United States. ACH processes large volumes of credit and debit transactions in batches.

Bank Account

Use Bank Accounts in QuickBooks to keep track of your Checking, Savings, and Money Market accounts. Add one bank account for every account your company has at a bank or any financial institution.

Set up a bank account

Follow these steps to setup a bank account:

  1. From the Lists menu, go to Chart of Accounts.
  2. On the Account dropdown, select New.
  3. On the Choose Account Type window, select Bank and Continue.
  4. On the Add New Account window:
    1. Type the Bank Name.
    2.  Select the Enter Opening Balance button and based on your bank statement, type in your Statement Ending Balance and Statement Ending Date. More information about opening balance is available here.
    3. Select OK, then Save & Close.

Enter a transaction in the bank account register

In QuickBooks Desktop, a bank account register can represent a checking, savings, money market, or petty cash account.

You can enter checks and deposits directly in a bank account register instead of using the Write Checks window and the Make Deposits window to create the transactions. Working directly in a bank account register allows you to work more quickly and lets you see the entire record of the account.

To do this task:

  1. From the Lists menu, go to Chart of Accounts, then double-click the bank account that you want to use.
  2. On the blank entry at the end of the register, enter the date, check or deposit number and payee.
  3. Enter the amount.
    • For checks and fees: Enter the amount in the Payment field.
    • For deposits and interest earned: Enter the amount in the Deposit field.
  4. Choose the account.
    • For checks: Enter the name of the account you use to track this type of expense.
    • For deposits: Enter the name of the account that is the source of the funds you are depositing.
  5. (Optional) In the Memo field, enter a note about the transaction.
  6. Select Record.

Bank Credit versus Bank Debit

Using the business owner perspective, Bank Credit is the transaction that increases the bank balance. For example, you say your bank was credited if money is deposited to it.

Using the business owner perspective, Bank Debit is the transaction that decreases the bank balance. For example, you say your bank was debited if money is taken out from it.

Check

Written order to a bank to pay a stated amount from the drawer’s account. Check numbers are unique per bank. Checks are considered good as cash. For details refer to Create, modify and print checks.

Credit card

Credit card gives the holder an option to borrow funds for purchases or for paying bills. If you have a credit card that you use for your business, you can Set up, use and pay credit card accounts.

Deposit

You need to Deposit customer payments into your bank account. A complete list of deposits will help you reconcile the account correctly.

EFT (Electronic Funds Transfer)

Electronic transfer of money from one bank account to another, either within a single financial institution or across financial institutions through computer-based systems and without the direct intervention of bank staff.

Petty Cash (Cash Drawer)

Small amount of cash on hand that is used for paying small amounts owed, rather than writing a check. Petty cash is also referred to as Petty Cash Fund. You need to put money into petty cash or a cash drawer so you can start using it to record your expenses.

Reconciliation

Reconciliation is the process of matching transactions you entered in QuickBooks Desktop with your bank or credit card company’s online statement. To learn more, see Reconcile bank and credit card accounts.

Routing number

Bank routing number or routing transit number (RTN) is a nine digit number used to identify a financial institution in a transaction. It's usually printed at the bottom left side of your checks.

Transfer Funds

You can transfer funds between checking, savings, and money market accounts in your chart of accounts.

  1. From the Banking menu, select Transfer Funds.
  2. In the Transfer Funds window, choose the account from which you want to transfer the funds.
  3. Select the account to which you want to transfer the funds.
  4. Enter the amount you want to transfer.
  5. Select Save & Close.

Undeposited Funds

QuickBooks uses Undeposited Funds to hold payments awaiting deposit. These can be cash, check or charge and are often stored in a cash drawer, bank bag or electronic batch. By default, Undeposited funds is turned on. You can change it by going through the Payment Preferences ( Edit > Preferences > Payments). To know more, refer to Understand how the undeposited funds account works.