I had an expense where I purchased an item. The supplier was out of stock so he gave me a refund. When the refund appeared on my bank statement Quickbook classified that as Uncategorised income. Hence when I went to print out my profit and loss statement it appeared as an income. How do I correct this?
Do I change the account from uncategorised income to the expense account?
It isn't necessary to change the refund account from uncategorised income to expense, @Trevor1511. I'm here to share further details about this.
QuickBooks Online (QBO) automatically assigns the unidentified amounts received when downloading transactions. Then put them to the Uncategorized Income account. Since it's a refund from your supplier due to an out of stock item, it should be considered as an income.
Based on your description of the scenario above, it seems that you've already added the refund transaction to QuickBooks. You can still assign it to the appropriate income account by updating its category. Let me guide you how.
Categorising your transactions will ensure that they match your real-life bank statements. With this, it's important to reconcile them every month. This way, you can monitor the growth of your business and make sure they're accurate. For the detailed steps, you can refer to this article: Reconcile an account in QuickBooks Online.
Please let me know if you have other concerns. I'm just around to help.
Thank you for your reply.
I am a little confused. Income in a profit and loss statement usually refers to sales of product or sale, not expenses that relate to general expense I believe.
Do I use the procedures listed to correct it, or is there another way to correct it. It was not a sales income, it was a refund on payment the business paid the supplier.
It has been 15 years since I have had to think about this sort of thing. Unfortunately due to Covid-19 restriction, I have not been able to generate any sales/income.
You can use the instructions provided above to change the category/account from Uncategorised Income to the category of your choice. However, if you are handling a supplier refund we have specific steps to record this in QuickBooks Online. The process looks a little tricky but will correct it. You will need to go to the Reviewed section of your Banking tab, and locate and undo the categorised refund. Then follow these steps:
Firstly, you need to create a Supplier Credit:
Secondly, you need to create a Bank Deposit (this will link to the amount received in your bank feed):
Finally, you need to create an Expense which will link the two together:
When you add both these transactions to the expense they will balance each other out - so no open transactions will show up in reports and so on, and any open or overdue amounts are cleared.
Seems like all of this would just be easier to exclude both the purchase and the refund from the ledger. your bank statement will be missing the charge and chargeback but your accounts will balance.
I'm here to share details about handling refund transactions in QuickBooks Online (QBO), @Rhiankelley.
When a refund is posted in your bank, it shouldn't be excluded. It needs to be categorised or matched appropriately to keep your financial data accurate. To learn more about this, you can check out this article: Categorise and match online bank transactions in QuickBooks Online.
Also, I encourage you to reconcile your accounts every month. This way, you can effectively manage your income, expenses, and detect any possible errors accordingly. For the step-by-step guide, you can refer to this article: Learn the reconcile workflow in QuickBooks.
Additionally, here's an article that'll further guide you in managing your business growth using QBO: QuickBooks Help Articles. It includes topics about data security, banking and transactions, and managing expenses, to name a few.
Please don't hesitate to drop your comment below if there's anything else that I can help you with. I'll be glad to help. Take care and have a great weekend.