Money going out
Doing business generally
requires obtaining goods and/or services from
your suppliers, and paying for them.
The accounts payable XE "accounts payable" function of QuickBooks begins by recording an invoice from a vendor, advising you of a delivery of value for which payment is required. An expense or asset transaction is usually recorded. On your command, the program writes a check in the bank account and records a payment in payables.
1. To be or not to be
recorded in payables XE "payables" ? Any purchase should go entirely through Accounts Payable, or else stay completely out of Accounts Payable. Once a bill is in A/P, it should be cleared only with a check written by the Pay Bills function. If a check is written using the Write Checks function, or directly into the check register, it is not automatically connected to any bill. (In the DOS versions, a check written with Write Checks, or in the bank account register, cannot be applied to a bill.)
2. One Payables account
is enough for nearly all businesses. (QuickBooks adds a special sales tax payable account.) Additional payables accounts should be added if and only if some unusual and well-understood reason definitely requires more payables accounts, and if you are adept at handling complexity.
3. Accrual method accounting
is the normal mode of QuickBooks. Many businesses use cash method accounting, and QuickBooks accommodates them with cash basis reports. These reports present a concern, if payables are paid through a credit card account. Cash basis reports look at the payables account, and consider an expense to be paid when it shows as paid in Payables. The status in the credit card account will be ignored.