How-to guides · US and Canada

Bookkeeping how-to guides

The everyday entries people look up while doing their own books: bounced cheques, refunds, prepaid and accrued expenses, payroll, sales tax and more. Each guide gives the short answer, the journal entry, a worked example and the steps in AcboBooks.

Customers and sales

How to record a bounced check (NSF cheque)

When a customer's check bounces, undo the payment: credit the bank account for the amount the bank took back and debit Accounts Receivable, so the invoice is open again.

How to record a customer overpayment

Record the full amount you received, apply what is owed to the invoice, and leave the rest on the customer's account as a credit.

How to record a customer refund

A refund is two steps.

How to record a sales return

A sales return reverses the sale and puts the goods back on the shelf.

How to record an early payment discount

When a customer takes an early payment discount, record the cash received, the discount as a sales discount, and clear the full invoice.

How to record a gift card sale

When you sell a gift card, record the cash and a liability, not a sale.

How to record a security deposit received

A refundable security deposit is money you hold for the tenant or customer, so record it as a liability: debit the bank and credit Security Deposits Held.

How to record cash sales from a till

Record each day's till total as one sales entry from the end-of-day (Z) report: sales and sales tax as credits, and the cash and card takings as debits to a clearing account such as Undeposited Funds.

How to record a barter transaction

Record a barter as a sale and a purchase at the same time, both at fair market value.

Vendors and bills

How to record a vendor credit

Record a vendor credit as the reverse of a bill: debit Accounts Payable for that vendor and credit the expense or inventory account the original bill used.

How to record a vendor refund

Record a refund from a vendor as a deposit: debit the bank and credit the account the original purchase was charged to, such as the expense or inventory account.

How to write a check for a vendor bill

If you already entered the bill, pay it with a bill payment: debit Accounts Payable and credit the bank, using the check number.

Banking and cash

How to fix a duplicate payment

First check the bank statement.

Void vs delete a check: which to use

Void a check when it was written but will never be cashed: the record stays, with its number, at $0.

How to split a deposit

Record one deposit for the amount on the bank statement, and split it into lines for each source: customer payments from Undeposited Funds, plus any other lines such as interest, a vendor refund or owner cash.

How to record a bank fee

Record a bank fee as an expense: debit Bank Service Charges and credit the bank account, dated the day the bank took it.

How to record interest earned

Record bank interest as income when the bank credits it: debit the bank account and credit Interest Income, an other-income account kept apart from sales.

How to reconcile a credit card statement

Reconcile a credit card like a bank account, but in reverse: start from the balance you owed last statement, tick every charge, credit and payment that appears on this statement, and enter the new balance owed.

How to record a transfer between bank accounts

Record a transfer as one entry that moves money between two balance sheet accounts: debit the account receiving the money and credit the account it came from.

Adjusting entries

How to record a prepaid expense

When you pay in advance for something you will use over several months, record the payment as an asset called Prepaid Expenses.

How to record an accrued expense

At the end of the period, record an expense you have incurred but not yet been billed for: debit the expense and credit Accrued Liabilities.

How to record deferred revenue

When a customer pays before you deliver, record the money as deferred revenue, a liability: debit the bank and credit Deferred Revenue.

How to reverse a journal entry

To reverse a journal entry, post a new entry with the same accounts and amounts but debits and credits swapped, dated when you want the effect undone.

Inventory and assets

How to record inventory shrinkage

After a physical count, compare what you counted with what the books show, and write the difference off at cost: debit an Inventory Shrinkage (or Cost of Goods Sold) account and credit Inventory.

How to record an insurance claim payout

If the claim pays for repairs, credit the payout against the repair expense or to an insurance recovery account.

How to record the sale of a fixed asset

To record the sale of a fixed asset, debit the bank for the sale price and debit Accumulated Depreciation for the depreciation recorded on it, credit the asset account for its original cost, and put the difference on a gain or loss line.

Payroll and sales tax

How to make a payroll journal entry

A payroll journal entry debits wages expense for gross pay and payroll tax expense for the employer's share, credits a liability for every amount withheld or owed to the government, and credits the bank for net pay.

How to record a GST/HST input tax credit

When a GST/HST registrant buys something for the business, record the GST/HST paid in its own account (an asset such as GST/HST Paid (ITC)), not as part of the expense.

How these guides work

Every guide starts with the answer in two or three sentences, then shows the accounting: which accounts go up or down, the journal entry as a debit and credit table, and a worked example with real numbers. Where the United States and Canada handle a thing differently (sales tax and GST/HST, payroll, slips and record keeping) the guide says so.

The last section shows where to do it in AcboBooks, using the menu and screen names in the released version. When the app has no dedicated screen for a task, the guide says so and shows the journal entry instead.

Looking for something else?

Longer guides on bank reconciliation, recording a business loan, credit card payments and fees, owner draws and contributions, petty cash, customer deposits, bad debts, fixed assets and depreciation and 1099 contractors are on the blog.
Definitions are in the accounting glossary.
Numbers to work out? Try the free tools and templates.

General bookkeeping information, not tax, legal or accounting advice.

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