You are a retailer or restaurant owner or bookkeeper.  You have a system for tracking your sales like a shopping cart (Shopify, Woo Commerce, Squarespace) a point of sale system (ShopKeep, Square, Revel, Talech..) 

Payments will come in from standard credit card merchant accounts, Shopify Payments, Square, Paypal, Stripe, gift cards, cash and maybe others.  

When you sell something, money is exchanged but it does not show up in your bank account right away.

These flows of money need to be tracked in your accounting system to make sure what your front end system (Square, Shopify etc) says you collected is actually what got into the bank account.  

This is why we use multiple "other current asset" accounts to track the flow.   These accounts represent funds that are not yet in the bank but are in limbo between your sales system and the bank.  

Shopify, Square, Stripe:

These payment providers collect funds from your customers and deposit the day's total money in your bank account minus fees and loans payments

Since you don't get 100% of what your point of sale system reports we create an account in QuickBooks to manage this flow.

For Shopify we create an account called Shopify Tendered Shopify Payments and for Square we create an account called Square Expected Deposits. (Note: do not use the standard Undeposited Funds account for Square or Shopify because the bank deposits window will fill up) 

The day's sales summary journal entry will increase these account by the total amount expected before fees or loan payments are removed.

When a bank deposit is posted we then create another journal entry that will reduce the other current asset account by the exact amount to zero it out.  Then we post the deposit amount to the bank account and fees and loans to the proper accounts. 

Cash and traditional merchant accounts:

Since most traditional merchant accounts deposit the exact amount tendered and take fees out at the end of the month you have the option to use your standard Undeposited Funds account and the "bank deposit" feature in QuickBooks to match deposits to what is expected.  But we recommend using a separate other current asset type account for each tender type. 

One thing to note with a traditional merchant account for credit card processing you get your money usually 2 days later.  If it's a weekend it can be up to 4 days later.  Also money is batched with a few days together.  This makes matching up a bit more difficult. 

With cash you get money in the register but there is a process for that money to get from the register to the office to the bank.  

Of course bookkeep™ automates all this for you daily and helps you easily reconcile daily using the banking feed in QuickBooks online.  

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