Accountants CPA Hartford
William Brighenti, Certified Public Accountant
Certified Business Valuation Analyst
Certified QuickBooks ProAdvisor

Office Address:  46 Mildrum Road, Berlin, Connecticut 06037-2423      Phone:  (860) 828-3269      Email:  info@cpa-connecticut.com
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Why Use the Make Deposits Feature in QuickBooks
Minimizes slips and saves time

If you are having difficulty doing bank reconciliations in QuickBooks, try using the Make Deposits feature when entering cash receipts and credit card transactions in QuickBooks.  Bank reconciliations that might require an inordinate amount of time to complete are greatly simplified, allowing a ready comparison of amounts posted in QuickBooks to deposit amounts shown on your bank statements.

Out of expediency, many QuickBooks users skip the Make Deposits step, just entering each check and credit card transaction when it is received and processed.  However, doing so may create headaches for the individual assigned the task to reconcile the bank account each month, since banks rarely itemize each individual check received or credit card transaction on its monthly bank statements.  In addition, the Make Deposits step is an excellent internal control procedure, making it easier for the accounting user to spot checks and transactions not entered into QuickBooks and possibly irregularities in the handling of cash receipts, including fraud.

True, it involves one additional, intermediate small step for the bookkeeper to undertake:  the entering of cash receipts and credit card payments to an account entitled "Undeposited Funds" in QuickBooks, before posting them to the "Checking" account.  But it is a giant leap for better accounting, providing improved internal control over cash.  When checks or credit cards are received and processed, that is one separate transaction from that involving the deposit of the funds in the bank or the batching of all credit card receipts for the day.  Accounting should reflect the reality of financial transactions, including trips to banks and batches to close out credit card transactions.  It documents that those steps and procedures had been undertaken and fulfilled.  How easy it is to overlook or forget them.

Sometimes it's days before someone undertakes the sojourn to the bank.  In the interim, checks may have been stuffed away in envelopes in the safe or someone's desk drawer.  It is not unusual, then, to discover that some checks never make it to the bank until a desk drawer is cleaned out or when a frantic search is undertaken for the recorded check that failed to appear on the monthly bank statement.  I know, first hand, because I have been guilty of such peccadilloes, driving me nuts in search of the elusive check while cursing every bank in town. 

Using the Make Deposits feature in QuickBooks becomes a necessity for businesses processing a large number of transactions daily and using banks no longer providing sufficient detail of each individual credit card transaction processed in a batch.  Although the accountant or bookkeeper can always resort to the details provided by copies of the credit card receipts, they, too, are often missing in Houdini fashion, due to some driver losing it after making a delivery, or an administrative assistant filing it only God-knows-where.  By entering each individual credit card transaction in "Receive Payments" and the daily batch total in Make Deposits, the reconciliation of bank accounts at the end of the month becomes less of a formidable task.

The additional minutia of time spent in utilizing the Make Deposits feature is not only more than offset at the end of the month when bank reconciliations are undertaken, but with the use of printable deposit slips for QuickBooks, the feature in total saves a great deal of time.  Preparing a manual deposit on tickets with carbonless duplicates consumes more than a few minutes.  An error in ink requires ripping out the original and copies and beginning anew.  Then there's the additional step of adding up all of the individual amounts. QuickBooks, on the other hand, automatically calculates the total deposit for you.  And if you entered an incorrect amount, merely type over, save, and print, and your deposit ticket is done.  A copy is retained in QuickBooks; just select how many copies required for your deposit and filing.

The end result is likely to be more accurate and so much more legible.  No one will have difficulty in distinguishing a "7" from a "1" or a "2", an "8" from a "0" or a "3".  And there is no need to concern oneself with addition errors, either.  Since dates, check numbers, payees, and amounts have already been entered into QuickBooks in "Receive Payments"—all of which can be assessed easily by a mere double-click—one is relieved of the frustrating task of attempting to cram identification information for each individual check deposit in spaces designed for micro-print.  QuickBooks automatically includes that information on one's deposit slip.  The entire process is neat, convenient, and virtually seamless.

By using the "Receive Payments" in conjunction with the "Make Deposits" features in QuickBooks, the bookkeeper and accountant are prompted to enter the detail of each cash receipt into the system, rather than an anonymous lump sum.  Such detail is crucial for subsequent inquiries, which are always inevitable, and a real time saver.  Furthermore, your outside auditor will appreciate the provided audit trail, perhaps expressed in a reduced bill at the end of the year.

A few words of caution and recommendations may be appropriate here.  Typically credit cards are batched at the end of the day, representing a complete day's "take".  However, at this time of day, administrative assistants, bookkeepers, cashiers, et al are biting their gums and nails waiting to leave tire tracks in your parking lot.  Consequently, it is inevitable that some batches will be skipped, resulting in a "double" batch on the following day, and batch totals not matching those on your bank statements.  If this has been happening at your business, a simple solution might be to batch the total of the prior day's credit card transactions at the beginning of the next business day.

Moreover, although you might think online banking obviates many of the concerns expressed here in undertaking a bank reconciliation, think again.  More problems typically result from downloading all banking transactions directly from the bank into QuickBooks, specifically double postings.  More importantly, a cardinal sin of internal control in any accounting system is to bestow upon the person handling cash (i.e., your banker) the function of posting or recording cash.  These two functions should always be kept separate.  Banks make errors, too, and they typically are not in your favor.  If online banking is used, separately post cash receipts from customers without downloading them directly from the bank.

This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice.  For further information, please consult appropriate professional advice from your attorney and certified public accountant. 

Have a tax or an accounting question?  Please feel free to submit it to William Brighenti, Certified Public Accountant, Hartford CPA Accountants.  For information and assistance on any tax and accounting issue, please visit our website:  Accountants CPA Hartford.

If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  The above tax advice was written to support the promotion or marketing of the accounting practice of the publisher and any transaction described herein.  The taxpayer recipients of this offering memorandum should seek tax advice based on their particular circumstances from an independent tax advisor.
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