Clearing account can often be confused with suspense accounts, this is because both are temporary accounts. Suspense account is all about solving a mystery, but clearing account is much like a general ledger used as a reminder for services or goods received or sold that have not yet been billed or other transactions that can’t yet be recorded in detail. In simple words, a clearing account is an account used to move money from one account to another account, when one cannot move the money directly. This account normally has a balance of $0.00 because you always take out the same amount that you put in. This is also called as a barter or wash account.
Setting up clearing account depends on, where it is done. If you are interested in setting up a clearing account in QuickBooks desktop, then here is what you have to do. In this piece of information, we are going to discuss the steps involved in the process to set up a clearing account in QuickBooks. Thus, we recommend you to stay hooked to the post and learn the entire process in detail. You can also schedule a call with our team at 1(844)405-0906 and they will answer all your queries instantly.
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Common uses of clearing account
Clearing account can be used for multiple purposes. In case the user is having multiple uses for the account, then he/she might want to create one for each.
Managing customers and AR
- Using clearing account, one can manage accrual basis bad debt
- Also, it helps in moving a credit memo from one job to another job under the same customer
- Transferring an amount from one A/R account to another AR account
- Allocating overhead expenses to customers or classes using a zero check
- Moreover, recording one check that pays invoices to two customers
Managing vendors and AP
- Clearing account can be used to move an amount from one AP account to another AP account
- One can use this account to record a refund check from one vendor on behalf of another vendor
- Transferring a bill or bill credit from one vendor to another
Others
- Clearing account can assist in moving foreign currencies without converting to the home currency
- Also, one can write off a receivable against a payable
- With clearing account, one can easily record barter transactions with a company, who is a customer and a vendor
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Steps to set up a clearing account in QuickBooks desktop
Clearing account can be easily set up with the help of the steps listed below:
- To start with, the user will have to select chart of accounts from the list’s menu
- And then, right click anywhere in the chart of accounts and also choose new tab
- Once done with that, the user should select the bank radio tab in the add new account window
- It should be noted that when the user opts for several types of accounts, then selecting bank account is recommended, due to below reasons:
- The user can pay into a bank account via receive payments or make deposits
- Also, the user can pay out of a bank account via write checks or pay bills
- Moreover, a bank account is seen on the balance sheet and on the statement of cash flows to balances and changes in balances
- This can also be helpful in allocating the expenses to overhead or class using a zero check
- It should be noted that when the user opts for several types of accounts, then selecting bank account is recommended, due to below reasons:
- The next step is to choose continue tab
- And also, the user should enter clearing account, barter account or wash account in the account name field
- Moving ahead, the user should avoid entering an opening balance
- And choose save and close
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Steps to use a clearing account in QuickBooks desktop
One can use the clearing account, by following the steps listed below:
- First of all, the user is supposed to create a journal entry
- And then, add the AR or AP from which you are moving money
- The next step is to add clearing account
- Followed by saving the journal entry
- Moving ahead, the user should create a second journal entry
- And add the clearing account
- Now, add the AR or AP account to which the money is being moved
- Lastly, the user should link the journal entries together in either pay bills or receive payments
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To conclude!
Setting up clearing account in QuickBooks desktop is not a tough nut to crack, all it needs is to follow some set of steps. Have you implemented the strategies listed above? Still unable to set up a clearing account in QuickBooks? Well, here we are to rescue you.
You can catch up with our US based accounting experts, by way of our QuickBooks contact number i.e. 1-844-405-0906. And our dedicated services providers will be more than happy to help you.
