When creating a new supplier/expense transaction, the payment account can't be 'other current asset' type, why?

jones.chg · ‎March 14, 2020

per the link here about encoding advance payment to supplier: https://quickbooks.intuit.com/learn-support/en-us/accounts-payable/record-vendor-prepayments-or-depo... the option 2 ask to create an Other Current Asset account, but this account can't be used in supplier/expense transaction. Why?

Ryan_M · ‎March 14, 2020

Hi @jones.chg,

Thank you for the amount of detail you've included in your post above. I'm here to clear things up for you.

The product you're using is QuickBooks Online (QBO), while the article you mentioned is for QuickBooks Desktop (QBDT). These 2 products have different features from each other, which is why the steps listed in the article don't work for you.

Since you need to record vendor prepayments, I suggest you create an expense transaction.

Here's how:

Go to the + New menu.
Select Expense.
Choose the vendor under the Payee drop-down menu.
From the Payment account drop-down menu, choose a bank account where the payment came from.
On the Category details section, under the Category column, enter Accounts Payable (A/P).
Type in the amount under the Amount column.
When done, click Save and close.

When you receive the product(s) you ordered, you can then create a bill.

Follow these steps:

Move to the + New menu.
Select Bill.
Choose the same vendor under the Vendor drop-down menu.
Fill out the form with the necessary details such as the total amount you need to pay.
Tap Save when done.

Still, on the Bill page, click the Make payment button to proceed. Ensure that the bill you created above is checked, as well as the expense earlier. See the screenshot below for reference.

In case you need to enter outstanding balances for customers or vendors, take a look at this article: How to enter outstanding balances for customers and vendors. It lists the accounts that are affected when you make these changes.

Need further help? Drop a comment below, and I'll get back to you.

View solution in original post

Ryan_M · ‎March 14, 2020

Hi @jones.chg,

Thank you for the amount of detail you've included in your post above. I'm here to clear things up for you.

The product you're using is QuickBooks Online (QBO), while the article you mentioned is for QuickBooks Desktop (QBDT). These 2 products have different features from each other, which is why the steps listed in the article don't work for you.

Since you need to record vendor prepayments, I suggest you create an expense transaction.

Here's how:

Go to the + New menu.
Select Expense.
Choose the vendor under the Payee drop-down menu.
From the Payment account drop-down menu, choose a bank account where the payment came from.
On the Category details section, under the Category column, enter Accounts Payable (A/P).
Type in the amount under the Amount column.
When done, click Save and close.

When you receive the product(s) you ordered, you can then create a bill.

Follow these steps:

Move to the + New menu.
Select Bill.
Choose the same vendor under the Vendor drop-down menu.
Fill out the form with the necessary details such as the total amount you need to pay.
Tap Save when done.

Still, on the Bill page, click the Make payment button to proceed. Ensure that the bill you created above is checked, as well as the expense earlier. See the screenshot below for reference.

In case you need to enter outstanding balances for customers or vendors, take a look at this article: How to enter outstanding balances for customers and vendors. It lists the accounts that are affected when you make these changes.

Need further help? Drop a comment below, and I'll get back to you.

jones.chg · ‎March 15, 2020

Ryan,
Thanks, it works.
But the process seems not so efficient and some issues:
1. The final 2 steps, bill and bill payment, can be really combined as one like the process introduced in before link (desktop version). I think this can be easily resolve if your developing team can add A/P accounts into the Payment account drop-down list in the Supplier/Expense screen, or let Current Asset being work.
2. The final step, bill payment, we pay by credit instead of real current asset account, so the Bank/Credit account drop-down list is redundant, but we still need to choose one even the system doesn't use this choose as making the transaction. I think this is bug.

Hope these points can help your team to make QBO better. I love this app because it's really very helpful for a small business without too much accounting efforts.

MaryLandT · ‎March 15, 2020

Thank you for getting back to us and for the recommendation, jones.chg.

I'll take note your request about using the accounts payable for the payment account. And, pass it along to our Product Team so they can take a look and discuss about this feature.

For now, I recommend visiting the Product Updates page to know what's new and coming in the system. This link has topics about the latest improvements in QBO.

Feel free to leave a comment below if there's anything else I can help you. I always have your back.

EndlessDoF · ‎December 08, 2021

Hello,

When entering an expense (or even Bill payment), I would like to choose a Prepaid Expense account in the Payments drop down but it won't let me save it, regardless of which Payment Type I choose (I even added a Prepaid Expense Payment Type). This makes no sense as it's customary to prepay for a period of months and then be invoiced for a subscription or service wherein the payment is applied against the prepaid balance. I don't want to have to enter it as a j/e when we receive an actual invoice/statement. There should be a setting that allows me to choose any of the Other Current Asset accounts that show in the drop down versus only being able to choose a bank account (or the Undeposited Funds account) when the account has a balance for which the credit can be applied!

Please help!!

Archie_B · ‎December 08, 2021

Thank you for responding in this thread, EndlessDoF.

I'd like to share what I know about creating an expense in QuickBooks Online.

Each account types are the actual accounting components that tell QuickBooks Online how transactions should hit your books. Therefore, you need to make sure that you select either bank or a credit card account as a payment account when creating an expense.

This article will give you for more information about the different account types in QuickBooks: Learn about the chart of accounts in QuickBooks.

I've also included this link as you future reference: What are account registers in QuickBooks Online?

Please let me know if you still have questions or clarifications about it. I'll be here to answer them. Have a great day!

Whitmore5 · ‎March 28, 2022

Select + New. Select Expense. Create an expense to the Supplier by selecting a Payee and Payment account. Under the Category column, select Account: Accounts Payable (A/P), then enter the description and the amount.

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When creating a new supplier/expense transaction, the payment account can't be 'other current asset' type, why?