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Conquer 27 Frustrating Mistakes

Crack the COGS Code




***QUESTION***

Hi Jennifer,

How are suspense accounts set up? I don’t see them listed as an account type in the Chart of Accounts.

~R

***MY COMMENTS***

Suspense is not an account type, that’s why you don’t see it there in the Chart of Accounts (COA) when setting up new accounts. When you create a suspense account, you can set it up as any type you want. Many people set them up as Expense accounts. I did this myself for many years.

Now I set them up as a Bank type. This way it can also be used as a Wash Account, and then reconciled. Even though they have two different purposes, you can use a single account for both Wash and Suspense, but only if you set it up in the Balance Sheet section of the COA, because only these accounts can be reconciled.

Chapters 1-4 of the 27 Mistakes ebook show many of the different mistakes people make with the COA. Have you see it?

Thanks for writing.

***QUESTION***

Jennifer,

I really like your newsletters! I wish you would publish them more often, because I think they’re the best QB newsletters out there.

I wanted to ask you a question though. I set up a suspense acct but need to assign a number. What number should I give it? Thanks!!!!

RD from NY

***MY COMMENTS***

Hey RD!

I am going to try to publish the newsletters more often, but haven’t lately for personal reasons. Thanks for the encouragement.

Give the suspense account any number you want. Since it should always have a zero balance at the end of an accounting period, it really doesn’t matter which number you give it since zero balance accounts don't show on financial reports.

***QUESTION***

First off I wanted to say that your 27 Mistakes book is amazing. It boggles my mind that nobody ever covered this stuff before like that. I was making ELEVEN of the mistakes, but no more. I can now figure out things that would have made me scratch my head just a couple months ago. You are the QuickBooks Queen! I have improved quite a bit, and I keep your ebook on my desktop just in case. But I looked through it and couldn’t find an answer to this problem.

I created an invoice. When I set up the item, I set it up to the suspense account. When I apply the customer’s payment, the amount in the suspense account does not wash out? What’s going on?

Thanks again for straightening me out!

B.

***MY COMMENTS***

Hi B,

Wow thanks for the kind words! It’s humbling and gratifying to see people do better and better in QB by using my ebooks. Makes it all worth it.

Ok, so here’s the story on your question: receiving the payment does not “wash out” where the invoice posted. If this was the case, then even for regular invoices, the revenue would get “washed out” every time a customer paid the invoice.

When you created the invoice, you showed that your customer owed you money. You also showed the amount as a credit to the suspense account. Then when the payment was received, it lowered the amount owed to you by your customer, and it also increased your cash.

Why did you choose a suspense account for that item? Instead of “washing out” the amount in the suspense account, you may want to consider using a different item on the invoice, an item that posts to a revenue account. As long as the amounts are the same, and as long as the taxable status is the same, it won’t change the customer’s payment status. Why did you choose a suspense account for that item?

Did you happen to see in chapter 16 where I discuss the different ways to show revenue? Sometimes people choose a way that’s not best for their business.

I hope this helps. Thanks for writing.



P.S. If you’re reading this and are wondering how to avoid the most common and frustrating mistakes people make in QB, go here right now and download a free chapter to check it out:

Conquer 27 Frustrating Mistakes

P.P.S. If you have inventory, do you know how it all works in QB? (ignorance is NOT bliss, it’s expensive!) Go here to Crack the COGS Code:

Crack the COGS Code







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