In this article you’ll learn how to set up an Clearing Account in QuickBooks To know more call QuickBooks Customer Care.
What is a Clearing account?
An account which can be used to move money from one account to another is when you are unable to move money directly is known as a clearing amount.
The balance of this account generally remains $0.00 because you always take out the same amount that you are putting in. It can also be called a Barter or Wash Account.
For a clearing account the given below are the common uses. You may want to create one for each if you have multiple uses for the account.
- Management of customers and AR
- Management of accrual basis bad debt.
- Moving a Credit Memo from one job to another job for the same customer.
- Transferring amount from a single A/R account to another A/R account.
- Using a zero check, allocating overhead expenses to customers or classes
- Record a single check which pays invoices for two customers.
- Management of vendors and AP
- Moving an amount from an AP account to some other AP account.
- On behalf of another vendor, recording a refund check from one vendor .
- Transfer one Vendor to another a bill or bill credit transfer, e.g., bill consolidation.
- Without converting to your home currency, moving foreign currencies.
- Writing off a receivable with a payable.
- A customer and a vendor, recording barter transactions with a company.
How to set up a clearing account?
- Click on Chart of Accounts from the lists menu.
- In the Chart of Accounts, right click anywhere and then select New.
- Select the Bank radio button in Add New Account. Please Note: From several types of accounts you can choose, the best is to choose a bank account because of the following reasons:
- Receive Payments or Make Deposits can help you pay into bank Account.
- Write Checks or Pay Bills can pay out of a bank account.
- On the balance sheet a bank account appears and in case of a statement of cash flows balances and changes in balances.
- You must use a bank account as your Clearing account to allocate expenses to overhead or class using a zero check
- Click on Continue.
- Enter Clearing Account in the account name field. (Also known as Barter Account or Wash Account.)
- Don’t enter an opening balance.
- Click on Save & Close.
How to use a clearing account?
- Firstly, create a journal entry.
- From the AR or AP which you are moving money from add that.
- Now, add the Clearing account.
- In the next step, you’ll have to save the Journal Entry.
- Now, again create a second Journal Entry.
How to add the Clearing Account?
From the AR or AP which you are moving money from add that.
Link the Journal Entries together in either Pay Bills or Receive Payments
To know more on how to set up a clearing account in QuickBooks desktop, call on our QuickBooks Customer Care. You can also write to us at firstname.lastname@example.org . For more information visit, www.quickbooksupport.net .