QuickBooks Online uses double-entry accounting, which means each transaction or event changes two or more accounts in the ledger. Each of these changes involves a debit and a credit applied to one or more accounts.
For most transactions, the entries of debits and credits are handled by QuickBooks Online. However, understanding the ways debits and credits work will help you understand the basic functions behind transactions and what to expect when entering them.
Debits and credits in QuickBooks Online
This table shows how account balances are affected by debits and credits in QuickBooks Online. It can be useful if you have to create an adjusting entry or journal entry.
|Bank/Cash in Hand||+||-|
|Accounts Receivable (Debtors, Trade and Other Debtors, Trade and Other Receivables)||+||-|
|Other Current Asset (Inventory, Undeposited Funds)||+||-|
|Fixed Asset (Property, Equipment)||+||-|
|Other Asset (Long-term Assets, Non-current Assets)||+||-|
|Accounts Payable (Creditors, Trade and Other Creditors, Trade and Other Payables)||-||+|
|Other Current Liability (Current Liability)||-||+|
|Long Term Liability (Long Term Creditors, Non-current Liabilities)||-||+|
|Other Income (Other Revenue)||-||+|
|Cost of Goods Sold (COGS, Cost of Sales)||+||-|
You can learn more about how accounts get debited and credited by customising the General Ledger report to show debit and credit amounts.