Liz Scott Contributing Author at Insightful Accountant reviews the three workflows QBO users should review when dealing with a Vendor credit or refund.
Vendor Credits and Refunds seem to stump end users. I’ve often found clients who created income accounts for credits and refunds. This has led me to believe there could be a short circuit in their understanding of the bookkeeping associated with vendor credits and refunds.
Accordingly, it’s important for ProAdvisors to train and re-train their QBO users in the workflows associated with vendor credits and refunds.
Vendor credits and refunds are designed to credit the original account used to make the purchase. For example, if a bar purchases a case of vodka, but one of the bottles arrives broken, the vendor normally will issue a credit to remove the expense of the broken bottle.
There really are three workflows we should consider (see flowchart below).
In the above illustration, the two workflows on the left represent those in which a credit, but no refund, has been issued. On the right is the workflow in which the credit is transmitted with the corresponding refund. […]