How To Reclassify Transactions In QuickBooks Online
Today we are going to be talking about how to reclassify transactions in QuickBooks Online. Throughout the month you may have one or two transactions that are going to the wrong account on your profit and loss statement or balance sheet. Here are a few ways that we can reclassify those transactions within QuickBooks Online.
Use A Journal Entry
Using a journal entry to reclassify transactions is a simple way to reclassify a transaction inside of QuickBooks.
The steps outlined below will help you build the correct journal entry to reclassify an expense from one expense account to another:
In QuickBooks Online, click on the New button and in the Other section click on Journal Entry
Enter the journal date, which is the date that you want to make the reclassification effective as of. Usually we would choose today’s date.
Enter the journal number which does not have to numeric.
In the grid below the journal number, find the first account we want to use for the reclassification.
Since we are moving an expense account to another expense account, for the first account we will want to put the dollar amount into the Credit column
Now let’s find the second account to use and put the same dollar amount into the Debit column.
If you would like to, you can enter a description in the Description field but it is not required.
We would leave the Name field blank.
Now click on the Save button at the bottom of the screen or click on the Save and Close if you are finished adding journal entries.
When you run your profit and loss report next, it will show the decreased balance in the first account and an increase in the balance of the second account.
This is how to reclassify transactions using a journal entry. This method is required to be used if you are reclassifying a transaction from a prior period and you use the Close Books feature in QuickBooks Online.
Modify the Original Transaction
Another method of reclassifying transactions in QuickBooks Online is to modify the account on the original transaction. This method is probably the easiest way to reclassify a single transaction to a new account. You don’t need to know how to create journal entries and the actual accounting is done for you. Here is how to change the account on the original transaction:
Find the original transaction
In the line item grid change the account to the correct account
Click on Save or Save and Close
Now when you run your reports, that account will be updated
This is how to modify an existing transaction to change the account number. Please note that if you have a transaction that is reconciled and you change the account number, it can cause the reconciliation to be out of balance. Likewise, you cannot do this on a transaction that is in a closed period.
Use the Reclassify Transactions Tool
This tool in QuickBooks Online allows you to reclassify a group of transactions. It is by far the easiest way to reclassify an entire set of transactions. This tool can be found in the Accountant Tools section at the top of the screen. If you do not see that option, make sure you are running QuickBooks Online in Accountant view and not Business view.
To get started with the Reclassify Transactions tool, please do the following:
Click on the Accountant Tools button
Choose the Reclassify Transactions option
Find the account that has the incorrect transactions in it from the list of accounts on the left hand side
If necessary change the dates on the right hand side to include the transactions you are looking for
Select the transactions that system found either individually or by checking the box in the header
Click on the Reclassify button and then choose the account to reclassify those transactions to
Click the Apply button
Now all of the selected transactions will be reclassified to the new account
This tool makes reclassifying large numbers of transactions really easy. It is definitely a powerful tool to have in your toolbox.
So today we learned about 3 ways to reclassify transactions in QuickBooks Online. We learned how to do this as a journal entry, by changing the original transaction and by using the reclassify transactions tool.
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