Why Use the Make Deposits Feature in
QuickBooks
Minimizes
slips and saves time
If you are having difficulty doing bank reconciliations in QuickBooks,
try using the Make Deposits
feature when entering cash receipts and
credit card transactions in QuickBooks. Bank reconciliations that
might require an inordinate amount of time to complete are greatly
simplified, allowing a ready comparison of amounts posted in QuickBooks
to
deposit amounts shown on your bank statements.
Out of expediency, many QuickBooks users skip the Make Deposits step,
just entering each check and credit card transaction when it is
received
and processed. However, doing so may create headaches for the
individual assigned the task to reconcile the bank account each month,
since banks rarely itemize each individual check received or credit
card transaction on its monthly bank statements. In addition, the
Make Deposits step
is an excellent internal control procedure, making it easier for the
accounting user to spot checks and transactions not entered into
QuickBooks and possibly irregularities in the handling of cash
receipts, including fraud.
True, it involves one additional, intermediate small step for the
bookkeeper to
undertake: the entering of cash receipts and credit card
payments to an
account entitled "Undeposited Funds"
in QuickBooks, before posting them to the "Checking" account. But it is
a giant
leap for
better accounting, providing improved internal control over cash.
When checks or credit cards are received and processed, that is one
separate transaction from that involving the deposit of the funds in
the bank or the batching of all credit card receipts for the day.
Accounting should reflect the reality of financial transactions,
including trips to banks and batches to close out credit card
transactions. It documents that those steps and procedures had
been undertaken and fulfilled. How easy it is to overlook or
forget them.
Sometimes it's days before someone undertakes the sojourn to the
bank. In the interim, checks may have been stuffed away in
envelopes in the safe or someone's desk
drawer. It is not unusual, then, to discover that some checks
never make it to the bank until a desk drawer is cleaned out or when a
frantic search is undertaken for the recorded check that failed
to appear on the monthly bank statement. I know, first hand,
because I have been guilty of such peccadilloes, driving me nuts in
search of the elusive check while cursing every bank in town.
Using the Make Deposits
feature in QuickBooks becomes a necessity for
businesses processing a large number of transactions daily and using
banks no longer providing sufficient detail of each individual credit
card transaction processed in a batch. Although the
accountant or bookkeeper can always resort to the details provided by
copies of the credit card receipts, they, too, are often missing in
Houdini fashion, due to some
driver losing it after making a delivery, or an
administrative
assistant filing it only God-knows-where. By entering
each individual credit card transaction in "Receive Payments" and the daily
batch total in Make Deposits,
the reconciliation of bank accounts at the end of the month becomes
less of a formidable task.
The additional minutia of time spent in utilizing the Make Deposits
feature is not
only more than offset at the end of the month when bank reconciliations
are
undertaken, but with the use of printable deposit slips for QuickBooks,
the
feature in total saves a great deal of time. Preparing a manual
deposit
on tickets with carbonless duplicates consumes more than a few
minutes. An error in ink requires ripping out the original
and copies and beginning anew. Then there's the additional step
of adding up all of the individual amounts. QuickBooks, on the other
hand, automatically calculates the total deposit for you. And if
you entered an incorrect amount, merely type over, save, and print, and
your deposit ticket is done. A copy is retained in
QuickBooks; just select how many copies required for your deposit and
filing.
The end result is likely to be more accurate and so much more
legible. No one will have
difficulty in distinguishing a "7" from a "1" or a "2", an "8" from a
"0" or a "3". And there is no need to concern oneself with
addition errors, either. Since dates, check numbers, payees, and
amounts have already been entered into QuickBooks in "Receive Payments"—all of which can
be
assessed easily by a mere double-click—one is relieved of the
frustrating task of
attempting to cram identification information for each individual check
deposit in spaces designed for micro-print. QuickBooks
automatically includes that information on one's
deposit slip. The entire process is neat, convenient, and
virtually seamless.
By using the "Receive Payments"
in conjunction with the "Make Deposits"
features in QuickBooks, the bookkeeper and accountant are prompted to
enter the detail of each cash receipt into the system, rather than an
anonymous lump sum. Such detail is crucial for subsequent
inquiries, which are always inevitable, and a real time saver.
Furthermore, your outside auditor will appreciate the provided audit
trail, perhaps expressed in a reduced bill at the end of the year.
A few words of caution and recommendations may be appropriate
here.
Typically credit cards are batched at the end of the day, representing
a complete day's "take". However, at this time of day,
administrative
assistants, bookkeepers, cashiers, et al are biting their gums and
nails waiting to leave tire tracks in your parking lot.
Consequently, it is inevitable that some batches will be skipped,
resulting in a "double" batch on the following day, and batch totals
not matching those on your
bank statements. If this has been happening at your business, a
simple solution might be to batch the total of the prior day's credit
card transactions at the beginning of the next business day.
Moreover, although you might think online banking obviates many of the
concerns
expressed here in undertaking a bank reconciliation, think again.
More problems typically result from downloading all banking
transactions directly from the bank into QuickBooks, specifically
double
postings. More importantly, a cardinal sin of internal control in
any accounting system is to bestow upon the person handling cash (i.e.,
your banker) the
function of posting or recording cash. These two functions should
always be
kept separate. Banks make errors, too, and they typically are not
in your favor. If online banking is used, separately post
cash receipts from customers without downloading them directly from the
bank.
This article is provided for informational purposes and is
not intended to be construed as legal, accounting, or other
professional advice. For further information, please consult
appropriate professional advice from your attorney and certified public
accountant.
Have a tax or an accounting question? Please feel free to submit
it to William Brighenti,
Certified Public
Accountant, Hartford CPA Accountants. For information
and assistance on
any tax and accounting issue, please visit our website: Accountants CPA
Hartford.
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