Hello
I have used Quickbooks Online back when I ran my own business, but at the time I didn't have the accounting knowledge I do now. Its been a few years since using it and I for some reason am having a hard time figuring out the practical way of using it based on Accounting practices. It may just be a total moment of brain fog, but here we go anyway....
So, TWO QUESTIONS (Brace yourself they are long winded):
#1) How do I apply the double entry principle when it seems I have to record things 4 times?
Okay so for example, every month I take money out of the chequing account (aka. "Cash") and place it into a savings account for expenses for the month within that category (aka. "Prepaid Expenses"). Now when I go to categorize the transaction I'm confused as to what I need to do because technically in the General Ledger it would read a transaction with a debit entry into Prepaid expenses and a credit entry under Cash. But here is my question: Does that mean that I ONLY use the transaction information pulled from my bank when I am going to reconcile? Because technically the actual transaction is from my "chequing account" to my "TFSA Savings Account" both of which are connected to Quickbooks and when I go to review the transactions it technically is a transfer between the physical BANK accounts. But if I add the transactions and attach them to the correct physical bank account, credit card or line of credit, etc., TECHNICALLY no transaction has been recorded between the CASH and the PREPAID expenses account.
SO, do I only record the transactions in relation to my BALANCE SHEET/INCOME STATEMENT etc. accounts and then ONLY use the bank information for reconciling the transactions to make sure that they match technically what is happening in the real world? Or do I put it in twice. Once as the physical transfer and then again as a journal entry into my "accounts that are used in my BS/IS/SFP"?
#2) For things like Full year Insurance Policies. I want to have the full amount of the policy in an "Insurance Payable" Account, but the payment is monthly. I would like to see what is still owed at YR END as the insurance policies end at different times and change from year to year. However when I think about the entry I basically go well I would need to DEBIT Insurance Expense, and CREDIT Insurance Payable....but then that means that when I go to do the income statement for the month I am looking at the Insurance not showing up for those months that the initial transaction occurred in. Because the way I can see it being recorded is DEBIT INSURANCE PAYABLE and CREDIT CASH when the payment in the bank account goes through.
I for the life of me cannot think of a better way to record all this. Like I said my brain for some reason just has a block and I don't really have the time to play with it to figure it out. I have looked for answers elsewhere about the earlier question but nothing really explains this. Any help would be greatly appreciated with either of these!
