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Established Member
13 Comments
ProAdvisor
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

When you pay a credit card electronically with your bank acct. it is not an expense transaction.  It can be listed as a bank  transfer to the credit card acct.

 

Then you list the purchases on the credit card using +expense and use the credit card as the account from.  When the statement arrives, reconcile the credit card and create the payment.  

 

QBO has a learning curve for sure.  But I bet you have done things more “right” than incorrect.   Cat Happy

Community Host
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

Hey @xcftw

 

Welcome to the community. Happy to hear you figured out part of the transfer issue. 

 

@lynda already provided a great explanation, and I wanted to echo her in saying, based on your post, you're going about things the right (considered) way. There's a bit of a learning curve at the beginning, but once you get the hang of it, QBO all comes together quite nicely. 

 

Feel free to check out the official tutorial videos and reach out to us anytime!

Established Member
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

Could you please expand on your explanation.  I am having the same issue.  In both areas it is listed as a transfer and I am unable to change the ref no. type.  It is also affecting my P&L and I did not understand what I needed to do based on your explanation.

 

Thanks!

ProAdvisor
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

Hello @chuckln:

 

if you open the transfer, what accts does the transaction point to? 

 

Next, go to the profit and loss and find the transaction that is showing there.  Click to open that and then click more>and get the transaction history on it.  It is possible you have 2 transactions for this credit card payment?

 

Also, when you reconcile the credit card, is there a transaction that is not cleared from a prior period?  That will also indicate two transactions.  

Established Member
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

The transaction points to the business credit card.  If I look at the transaction journal, each month has a credit (say $500) and debit of $500.  Is this the correct way it should record the transaction?  I do see the credit card purchases in my P&L itemized data when I click on the total (i.e., office supplies, gas, electric...)

ProAdvisor
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

A payment of a credit card should be a check (or transfer) from Bank acct to credit card account.  It is ONE transaction.  You will see a credit to checking and a debit to the credit card if you look at the details listed under "more" transaction journal. 

 

Lynda

Experienced Member
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

I have a similar situation.

 

My company car is financed by a Credit Union.  Because I don't want to send a bill payment from my business checking (a different bank) directly to the credit union loan account (it's a $15/month extra fee), I sent the payment to the credit union savings account, and made the payment internally at the credit union.

 

However, when I synchronized my bank statement, it was picked up by QBO as a bank (Owners Equity) transfer, rather than an expense.

 

How can I change it to reflect its actual intent?

QuickBooks Team
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

Hello there, @Hammerhead.

 

It would be my pleasure to help you reflect this expense properly. When you say that you've synchronized your bank statement, do you mean that you're using Bank Feeds to download transactions from your statement into QuickBooks? When these items are imported, they appear in the For Review tab to be classified to their applicable income and expense accounts.

 

Since QBO suggests a category based on the bank description, it's possible this is what caused the issue when you added the transactions. Reclassify them by following the steps below:

 

  1. From QuickBooks Online, navigate to the Banking tab.
  2. Click the In QuickBooks tab, and scroll down until you see the transaction. Select Undo to bring it back into For Review.
  3. On the For Review tab, click the transaction and classify it with the desired expense account. Select Add to create the expense.

I'll attach a video displaying the process here:

 

 

This allows you to reclassify items that are imported incorrectly through the bank feed with ease. Please don't hesitate to get in touch with me here should you have any additional questions or concerns. Thanks for coming to the Community, wishing you continued success.

Established Member
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

I think I've got it.  Thank you!

QuickBooks Team
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

I'm glad you were able to get that transfer straightened out, @chuckln.

 

The Community will always be here for all of your QuickBooks Needs. Be sure to let me know if there's anything else I can do for you. Thanks for reaching out, have a wonderful rest of your day.

Established Member
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

I am really confused. People are asking why an expense is booked as transfer. My questions are:

1. How can a transaction between two balance sheet items ever be an expense ?

2. Rather why did QB even have an option of classifying the inter-bank transaction as an expense?

3. When one inter-bank transfer transaction was classified as an expense, it did not reflect in QB in P/L. So why do people ask about it ? Also why even QB gave an option ??

Established Member
Re: Reclassifying a Transfer to a Expense in QuickBooks Online
1. How can a transaction between two balance sheet items ever be an expense ?

2. Rather why did QB even have an option of classifying the inter-bank transaction as an expense?

3. When one inter-bank transfer transaction was classified as an expense, it did not reflect in QB in P/L. So why do people ask about it ? Also why even QB gave an option ??

QuickBooks Team
Re: Reclassifying a Transfer to a Expense in QuickBooks Online

Hello and welcome to the Community, @Karma_chopel.

 

It would be my pleasure to provide some clarification on the Transfer transaction in QuickBooks Online. In regards to each of your questions:

 

  1. Money movement between bank (asset) or credit card (liability) accounts can be represented by Transfer, Expense, or Deposit transactions. The source account is selected at the top, and the destination account below it.
     
  2. Ultimately, it's a decision of how your business would like to categorize the exchange. The type of transactions used will determine which reports display them. Credit card payments and inter-bank transfers are generally recorded with a Transfer transaction, but other accounts can also be used in case of unique scenarios.
     
  3. The inter-bank account transfer won't display on a Profit & Loss report because there are no income or expense accounts involved. The original poster was more concerned about the label than the purpose. Although the money movement was the same as an Expense or a Transfer, they would have preferred it be an Expense for consistency.
     

We offer detailed guides on handling bank transfers and categorizing downloaded bank transactions that you may also find helpful. Please know you can continue to reach me here with any additional questions or concerns. Thanks again, wishing you a wonderful rest of your day.