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Ron12
Level 2

reimbursable expense - switch from "As Expense" to "As Revenue"

  • I accounted for reimbursable expenses "As Expense". In other words, when I incurred an expense I debited an expense account named “Reimbursable Expenses”, and when that expense was reimbursed, I credited the “Reimbursable Expenses” account.
  • My accountant said that given my circumstances, I should account for reimbursable expenses "As Revenue" (show on the P&L both the reimbursed amount (as revenue), and the expense.)

 

In order to switch from "As Expense" to "As Revenue" I did the following:

  • Turned on "Track reimbursed expense as income"
  • Set up the relevant income accounts (e.g. "Reimbursed Expense, Airfare", "Reimbursed Expense, Lodging", etc.)
  • In the chart of accounts, I selected the income account to use for each reimbursed expense account
  • I was able to edit the expenses debits from the old “Reimbursable Expenses” account into the new expense accounts.
  • The problem is how to move the reimbursement credit from the expense account into the revenue account (currently the P&L shows negative expense, and no reimbursed revenue. The P&L should show reimbursed revenue and no negative expenses).
  • I think that the problem happens because these amounts were already invoiced and paid.
  • Background: when that invoice was paid, QB applied a Debit to cash and a Credit to the old “Reimbursable Expenses” account. I’d like to edit the Credit from the expense account into a revenue account. The problem is that I don’t see where I can edit the account to which the Credit is applied. All I see is the “Create Invoice screen” with “Reimb Group” entry which includes the expense amounts. There are no accounts to edit.

 

Thank you

 

 

6 Comments 6
JaneD
Moderator

reimbursable expense - switch from "As Expense" to "As Revenue"

Welcome to the Community, Ron12

 

I appreciate you elaborating the situation. The detailed information you've provided can help me look for a resolution.

 

Based on your scenario, create a journal entry so you can move the reimbursement credit amount into the revenue account from the expense account. 

 

Here are the steps:

  1. Go to the Company menu.
  2. Choose Make General Journal Entries and set the date.
  3. In the Account column, choose an income account and enter the amount on the Credit side. 
  4. On the second row, select the expense account and enter the amount in the Debit column.
  5. Once you're done, click on Save & Close.

See the Create a journal entry in QuickBooks Desktop article for further guidance.

 

Then, you can use an item when creating purchases billable to customers. So when they're converted into an invoice, the income will be allocated correctly moving forward.

 

I'm also linking an article about tips in creating journal entries.

 

Please let me know if you have any follow-ups or other questions. I'm always ready to lend a hand and help you further. Wishing you a good one.

Ron12
Level 2

reimbursable expense - switch from "As Expense" to "As Revenue"

Hi Jane,

 

Thank you for your answer :-)

 

Yes, I also thought about fixing the issue with a journal entry, but I felt like that solution is circumventing QB. 

From your answer I understand that going forward QB will book reimbursable expenses as revenue, but the only way to do it through QB after the payment was processed it through a journal entry.

 

Thanks again,

 

Ron

 

Ron12
Level 2

reimbursable expense - switch from "As Expense" to "As Revenue"

Hi Jane,

 

I used a journal entry to move the negative expense from the old "Reimbursable Expense" account into a new "Reimbursable Income" account.

In the chart of accounts, I also turned the old "Reimbursable Expense" account to inactive.

 

However, the old "Reimbursable Expense" account still appears in the P&L (with zero balance).

Is there a way to remove that account completely, or at least prevent it from appearing in the P&L?

 

Thank you

 

 

JaneD
Moderator

reimbursable expense - switch from "As Expense" to "As Revenue"

It's good to see you again, Ron12.

 

When you inactivate an account in QuickBooks, it gets removed from the Chart of Accounts and the system will create an adjustment entry to zero out the register's balance.

 

However, the inactive account will remain part of your company data to make sure all reports will remain unchanged.

 

You can find more information in this article: Understand QuickBooks Chart of Accounts.

 

Keep me posted if you have any questions. I'll be here to keep helping. Take care and have a great day.

Ron12
Level 2

reimbursable expense - switch from "As Expense" to "As Revenue"

 

Hi Jane,

 

I don'r think QB will let me delete that account because there are transactions posted into the account.

 

Ron

 

FritzF
Moderator

reimbursable expense - switch from "As Expense" to "As Revenue"

Thanks for getting back to us, @Ron12.

 

Yes, that's correct. QuickBooks won't allow you to delete an inactive account if it still has transactions. However, since it has a zero balance, there's a way to prevent that from appearing in the Profit & Loss report, and I'm happy to show you how:

 

  1. Pull up the Profit & Loss Standard report by clicking the Reports menu at the top, then Company & Financial.
  2. Select the Customize Report option on the upper left.
  3. Tick the Advanced option located at the bottom part of the Display tab.
  4. On the Display Columns section, choose Active or Non-zero. Either of these options will prevent the old reimbursement account from showing in the report.
  5. Once done, hit OK twice.

 

For additional information, consider checking out these articles:

 

 

Please let me know if you have any other issues or questions by leaving a comment. I'm more than willing to help. Have a wonderful day!

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