QuickBooks Online (QBO) is one of the most popular accounting software solutions for small and medium-sized businesses. One of the key accounting tasks in QuickBooks Online is making journal entries, which allow you to record transactions that don’t involve invoices, bills, or checks directly. Understanding journal entries is essential for accurate financial reporting, reconciling accounts, and correcting errors.
This guide is a complete step-by-step tutorial on how to make journal entries in QuickBooks Online. We’ll cover everything from basic concepts, examples, common mistakes, best practices, and FAQs, so even beginners can follow along confidently.
What Is a Journal Entry?
A journal entry is a record of a financial transaction in accounting. It consists of at least one debit and one credit, which must balance to keep your accounting books accurate. Journal entries allow you to:
- Record transactions not captured by standard forms like invoices or bills
- Adjust accounts at the end of an accounting period
- Correct errors in your accounts
- Move funds between accounts
In QuickBooks Online, journal entries are fully integrated into your general ledger, meaning they appear in all related financial reports automatically.
When to Use Journal Entries in QuickBooks Online
Journal entries are typically used in these scenarios:
1.Adjusting entries at month-end
-
- Example: Recording depreciation or accrued expenses
- Transferring balances between accounts
- Example: Moving funds from a petty cash account to checking
- Correcting accounting errors
- Example: Mistakenly posted a payment to the wrong account
- Recording non-standard transactions
- Example: Owner’s equity contributions or loan repayments
Tip: Avoid using journal entries for everyday sales or bills. Always use invoices or expense forms when possible.
Understanding Debits and Credits
Journal entries always involve at least two accounts: one debited and one credited. The total of debits must equal the total of credits.
How Debits and Credits Work
|
Transaction Type |
Debit |
Credit |
|
Asset Increase |
✅ |
❌ |
|
Asset Decrease |
❌ |
✅ |
|
Liability Increase |
❌ |
✅ |
|
Liability Decrease |
✅ |
❌ |
|
Revenue Increase |
❌ |
✅ |
|
Expense Increase |
✅ |
❌ |
Understanding this table is critical to avoid unbalanced journal entries, which QuickBooks Online will reject.
How to Make a Journal Entry in QuickBooks Online: Step-by-Step
Follow these steps to create a journal entry in QuickBooks Online:
Step 1: Log In to QuickBooks Online
- Go to QuickBooks Online login page
- Enter your credentials and select your company file
Step 2: Navigate to Journal Entries
- Click + New on the left-hand menu
- Select Journal Entry under the “Other” category
Step 3: Enter the Date
- Use the date the transaction occurred
- Important for accurate reporting in your general ledger
Step 4: Choose the Accounts
- In the Account column, select the account being debited
- Enter the Debit amount
- Choose the account being credited
- Enter the Credit amount
Step 5: Add Description (Optional but Recommended)
- Add a brief note explaining the purpose of the journal entry
- Helps with auditing and future review
Step 6: Attach Supporting Documents (Optional)
- Click Attachments to upload receipts, invoices, or statements
- Supports compliance and record-keeping
Step 7: Save the Journal Entry
- Click Save and Close to finish
- Or Save and New to create another entry immediately
✅ Tip: Always review your debits and credits before saving to avoid errors.
Examples of Common Journal Entries
Here are some real-world examples:
Example 1: Depreciation Expense
- Debit: Depreciation Expense $500
- Credit: Accumulated Depreciation $500
Example 2: Loan Payment
- Debit: Loan Payable $1,000
- Credit: Cash $1,000
Example 3: Correcting Mistaken Expense Entry
- Debit: Utilities Expense $200
- Credit: Office Supplies Expense $200
Example 4: Owner’s Equity Contribution
- Debit: Bank $5,000
- Credit: Owner’s Equity $5,000
Editing and Deleting Journal Entries
QuickBooks Online allows you to edit or delete entries if mistakes are made.
To Edit:
- Click Accounting > Chart of Accounts
- Locate the journal entry
- Click Edit
- Make changes and Save
To Delete:
- Follow the same steps to find the entry
- Click More > Delete
- Confirm deletion
⚠️ Warning: Deleting journal entries can impact reports, so ensure it’s necessary.
Best Practices for Journal Entries
To keep your accounting accurate:
- Always double-check your debits and credits
- Include clear descriptions for each entry
- Attach supporting documents for transparency
- Maintain consistent dates and periods
- Limit journal entries to transactions that cannot be recorded via other QuickBooks forms
Common Mistakes to Avoid
- Entering unbalanced journal entries
- Using journal entries for everyday sales or bills
- Forgetting to include supporting documentation
- Incorrect account selection
- Posting entries to the wrong accounting period
Following proper practices avoids audit issues and reporting discrepancies.
Advanced Tips for Multi-User QuickBooks Online
If multiple users manage journal entries:
- Restrict permissions for creating, editing, and deleting journal entries
- Use a review process where entries are checked by an accountant
- Track changes in the Audit Log to monitor user activity
Multi-user setups are more prone to errors; these practices prevent mistakes.
Reporting and Reviewing Journal Entries
How to Review:
- Go to Reports > Journal
- Select the date range
- Verify all entries for accuracy
- Export to Excel or PDF for audit purposes
Why Reporting Matters:
- Identifies discrepancies early
- Supports tax filings
- Helps management make financial decisions
Frequently Asked Questions (FAQs)
- Can I make recurring journal entries in QuickBooks Online?
Yes, you can set up recurring journal entries for transactions like depreciation or monthly adjustments.
- How do I know if my journal entry is balanced?
QuickBooks Online prevents saving if total debits do not equal total credits.
- Can I attach multiple documents to a journal entry?
Yes, QuickBooks Online allows multiple attachments for verification.
- Are journal entries visible in financial reports?
Yes, all journal entries appear in Profit & Loss, Balance Sheet, and General Ledger reports.
- Who should create journal entries?
Typically, an accountant or someone familiar with double-entry accounting should handle them.
Conclusion
Making journal entries in QuickBooks Online is an essential skill for accurate accounting and reporting. By following this step-by-step guide, using best practices, and avoiding common mistakes, you can maintain clean books and streamline your accounting workflow.
Journal entries allow you to record transactions that other forms cannot handle, adjust balances, and correct errors. Keeping them organized and accurate ensures your financial statements are reliable and audit-ready.