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Create Bills in QuickBooks Online

Last week we looked at a broad overview of accounts payable. Accounts Payable in QuickBooks Online (QBO) is basically creating bills to record expenses rather than checks. Creating bills gives us the flexibility of posting the expense to the correct time period, but still pay the amount to a supplier at any time.

In that overview, we used the sample file Craig’s Design and Landscaping Services. Craig completed a big job in January for which he created an invoice. But, since he had thirty day terms with his suppliers, he didn’t have to create a check to them until February.

Instead of seeing the revenue and expenses for the job in the same month, they appeared in different months, drastically distorting his profit and loss statement.

Today, let’s take a look at how Craig fixed that.

We will review a few things about a bill transaction in QBO.

First, note the date circled in the top portion of the screenshot above. Since the work was done in January, a January date has been used on the bill, even though it won’t be paid until later, in the month of February.

It’s important to remember that the bill records the expense in QBO. The accounting entry is creating the expense and creating a liability, the amount that is owed to the vendor. That part of the accounting equation is the Accounts Payable account.

Also, there are two sections on the bill where expenses are detailed. The top section, Account Details, allows the use of an account from the chart of accounts to be selected for the expense.

The second section, Item Details, should be used if you are using items to record your expense. As an example, if the bill were purchasing inventory, you would always use the Item Details section. On a bill, you can use one either section, or both.

We will save this bill. Now, the expense shows on our profit and loss report for January.

The bill we created for $2300 is part of the Job Expenses total showing on the profit and loss at $4552.

The bill also affects the balance sheet.

The other part of the accounting entry the bill makes is the amount owing to the vendor. That’s a liability. The $2300 bill is part of the $5552.67 balance in Accounts Payable on the balance sheet.

Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
7791 NW 46th St. Suite 109
Doral, FL 33166

Hector Garcia

Hector Garcia

Hector Garcia is a CPA and QuickBooks Consultant.

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