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oolong35
Level 1

Can I use OCA account "Prepaid Expenses" as the payment account when recording an Expense?

We have a vendor that requires us to add funds to our account to be used at a later time. The funds are added using our corporate credit card, and then used later on for different services. Once used, we'll need to move the funds used from our prepaid expense account to the correct expense account, or in some cases, sundry receivable since some transactions are billable to our customers. So, we need to be able to keep track of those deposited funds in QB, and then distribute the funds later on as they're used. I'm trying to figure out if there's a way to record all of the necessary entries through the Expenses section of QuickBooks Online. Creating Journal Entries requires a lot of extra paperwork/review that really isn't necessary for what we see as a pretty straightforward transaction. Let's assume I deposit $100:  Dr. Prepaid Expense (Other Current Asset account) $100 Cr. Credit Card  $100 Later on, let's say I use $50 of this for a service that is going to be booked to our Legal Fees expense account. I can't seem to come up with a way in the Expenses section of QBO to move the funds from Prepaid Expenses to Legal Fees. If I try to record the entry: Dr. Legal Expenses $50 Cr. Prepaid Expenses $50 I receive the error "Something's not quite right here. You need to select a different type of account for this transaction". Why is "Prepaid Expenses" an option if QBO won't allow it? Is there any way to record this entry without resorting to a Journal Entry? Any help would be appreciated. 
3 Comments 3
Nick K
QuickBooks Team

Can I use OCA account "Prepaid Expenses" as the payment account when recording an Expense?

Hi useremacmillan.

 

Transferring funds between accounts to pay expenses is one of the ways QuickBooks Online helps you keep all your accounts accurate. I'd be happy to go over this with you.

 

Based on the way you're making these entries the best way to transfer the funds between expense accounts would be by using journal entries. Another way you can create these expenses and pay them is by following the steps in this article.

 

If you're looking for another way I recommend reaching out to your accountant as they may have other ways to do this. If you don't have an accountant you can find one in your area by going to My Accountant on the left hand menu and selecting Find a pro to help.

 

If you have any questions let us know and we'd be happy to help.

oolong35
Level 1

Can I use OCA account "Prepaid Expenses" as the payment account when recording an Expense?

Hi Nick, thanks for taking the time. We'd prefer not to use journal entries here, since this is considered part of the accounts payable role and the entry should be possible from the Expense window. The Expense window even has the option to use "Prepaid Expenses" as a payment account, but I keep receiving the error saying something isn't right. Is there a way to turn off that restriction? Why show all asset accounts as payment accounts if we can't actually use them in this manner?

JamesM4
QuickBooks Team

Can I use OCA account "Prepaid Expenses" as the payment account when recording an Expense?

I see what you're seeing. At this point, I highly recommend getting in touch with an accountant professional for expert advice on this. I'll also leave this question open in the Community so other members can chime in and share their advice. In the meantime, feel free to ask other questions, I'm here to help. 

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