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Prepayment for vendor with QB on cash basic account . When i pay for vendor, i have not bill and cash basic account have not Prepayment account.

 
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Best answer 11-13-2019

Accepted Solutions
QuickBooks Team

Re: Prepayment for vendor with QB on cash basic account . When i pay for vendor, i have not bill ...

Hi THANHHUONG,

 

Thanks for getting back to us. 

 

You'll still have the option to select any category including the Account Payable (A/P) account when recording an expense transaction on a cash basis. Let me share with you a few information about this.

 

What transaction did you create which prompts QuickBooks Online (QBO) not to accept the transaction?

 

In accounting, revenue is only recognized once cash is received. Since you'll be receiving money with the cash basis method, this is the main reason why Accounts Receivable (A/R) and Account Payables (A/P) aren't recognized. 

 

Whereas in the accrual method, revenues are recognized on the income statement when they are earned (rather than when the cash is received).

 

I also recommend reaching out to our accountant for other ways on how to record the prepayment. 

 

I have this link in case you have other questions about QBO: Expenses And Vendors.

 

Reach out to us if you need anything else. I'll be right here to help.

 

View solution in original post

3 Comments
QuickBooks Team

Re: Prepayment for vendor with QB on cash basic account . When i pay for vendor, i have not bill ...

Hi there, thanhhuong.nt3,

 

I'd be glad to help record the pre-payment to your vendor.

 

QuickBooks Online lets you record vendor's pre-payment in two ways. You can either use accounts payable or asset account to pay a portion of the price before delivery.

 

Option 1: Use an asset account to track the prepayment.

 

You can write a check to the vendor and record it to an Other Current Asset (OCA) account. This will increase the balance until you are ready to pay the final bill.

 

First, create an account to track prepayments.

  1. Click the Gear ⚙ icon at the right top.
  2. Select Chart of Accounts under Your Company.
  3. Click New.
  4. Select Other Current Assets under Account Type and Detail Type.
  5. Enter the name of your account (example Prepayment account).
  6. Click Save and close.

Second, write a check to your vendor.

  1. Click the Create (+) icon at the right top.
  2. Select Check under Vendors.
  3. Enter the vendor name and date.
  4. Go to the Category details section, select the prepayment account, then enter the amount.
  5. Click Save close.

Third, enter the bill when items arrive.

  1. Click the Create (+) icon at the right top.
  2. Select Bills under Vendors.
  3. Enter the vendor name and date.
  4. Under the Category details section, select the prepayment account, then enter a negative value for the amount.
  5. Under the Item details section, enter the item. The bill will equal the balance owed after deducting the prepayment. Recording the bill will reduce the asset account.
  6. Click Save and close.

Lastly, pay the balance.

  1. Click the Create (+) icon at the right top.
  2. Select Pay bills under Vendors.
  3. Mark the open bill, then click Save and close.

Option 2: Use Accounts Payable to record prepayment

 

You can write a check to the vendor and record it to your Accounts Payable (A/P) account. This will decrease the balance until you are ready to enter the final bill.

 

First, create a check for the vendor:

  1. Click the Create (+) icon at the right top.
  2. Select Check under Vendors.
  3. Go to the Category details section, then select Accounts Payable.
  4. Enter the amount, then click Save and close.

Second, enter a bill.

  1. Click the Create (+) icon at the right top.
  2. Select Bills under Vendors.
  3. Enter the vendor name and date.
  4. Go to the Item details section, enter the item and amount.
  5. Click Save and close.

Lastly, apply the prepayment to the bill.

  1. Select Expenses from the left navigation bar
  2. Go to the Vendors tab.
  3. Locate and open the vendor's profile.
  4. Locate the bill, then click Make payment under the Action column.
    vendorprepayment2.PNG
  5. Mark the bill and the credit to link those transactions.
    vendorprepayment3.PNG
  6. Click Save and close.

Upon sharing the solution above, I still recommend consulting with your accountant. This is to know which option is best for your business.

 

Should you have follow-up questions, please leave a comment below. I'm always around whenever you need help.

Level 2

Re: Prepayment for vendor with QB on cash basic account . When i pay for vendor, i have not bill ...

Dear MarylanT 

 

Thanks you for your supports.

 

I just dont't carefully differents from cash basic and accural basic.  On cash basic account , have or have not AP and prepayment . 

 

Second, on Tab expense i use cash on hand pay to vendor. Is QB accepted? I try twice and QB is not accepte. 

 

Thanks and best regards

 

QuickBooks Team

Re: Prepayment for vendor with QB on cash basic account . When i pay for vendor, i have not bill ...

Hi THANHHUONG,

 

Thanks for getting back to us. 

 

You'll still have the option to select any category including the Account Payable (A/P) account when recording an expense transaction on a cash basis. Let me share with you a few information about this.

 

What transaction did you create which prompts QuickBooks Online (QBO) not to accept the transaction?

 

In accounting, revenue is only recognized once cash is received. Since you'll be receiving money with the cash basis method, this is the main reason why Accounts Receivable (A/R) and Account Payables (A/P) aren't recognized. 

 

Whereas in the accrual method, revenues are recognized on the income statement when they are earned (rather than when the cash is received).

 

I also recommend reaching out to our accountant for other ways on how to record the prepayment. 

 

I have this link in case you have other questions about QBO: Expenses And Vendors.

 

Reach out to us if you need anything else. I'll be right here to help.

 

View solution in original post

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