In QuickBooks you will sometimes find it necessary to edit or delete a deposit. The steps to maintain accuracy are not difficult, but for many users it is not clear how to keep the books straight. Watch this short QuickBooks Video tip on editing or deleting a deposit.
Editing a QuickBooks Deposit
You can easily edit a QuickBooks deposit by finding it in the bank register, right clicking on it and selecting edit deposit. If you recorded a deposit without using and invoice and the receive payments function then you can simply change the coding of the deposit. In this situation you would have made a deposit and coded it appropriately, most likely to some sort of income account. For example maybe you recorded a deposit to an income account called 'Sales' but you needed it in a more specific account such as 'Software Sales.' To fix the coding you can simply right click on the deposit in the bank register, select edit deposit, change the coding and save the deposit. Now you have your deposit coded correctly to where you intended.
The Correct QuickBooks Invoicing, Payment and Deposit Procedures
When you use the invoicing function through QuickBooks it is important to follow the rest of the steps of receiving a payment or you may overstate your income. The correct steps of QuickBooks invoicing are: create invoices/receive payments/record deposits. One common mistake I see QuickBooks users make is to create an invoice, but then not receive a payment against that invoice through the receive payments function. Instead they make a deposit in the bank and then record a bank deposit and code the deposit to sales, which overstates income. Income is recorded through the invoice, so if you don't follow the correct procedures you will overstate income and pay more taxes.
Editing an Undeposited Funds Deposit
The correct procedures of invoice, receive payment and record deposit will result in a deposit in the bank that is coded to undeposited funds. The undeposited funds account is a confusing issue for many QuickBooks users. If you try and change the coding from undeposited funds to an income account you will get this error message from QuickBooks:
You cannot edit payment information in a deposit transaction.
1) Delete the payment from the deposit.
2) Go to the original payment transaction to edit it.
3) Redeposit the payment.
The most common way you will find yourself in this situation is if you received a customer payment against the wrong invoice or used the wrong customer. The correct procedures are scary to unseasoned QuickBooks users because they don't understand what will happen. Step one is to delete the deposit, which many users believe will delete the payment. However, when you delete the deposit the entire deposit will be put back into the record deposits window. You can now go to the customer's account that had the incorrect payment and make the necessary changes. Then you simply go back to the record deposits window and record the deposit with the corrected changes.
When dealing with QuickBooks deposits it is important to understand how QuickBooks works or you may overstate your income. Also, when you do find yourself with a deposit mistake (believe me it will happen) then it is important to know and understand the procedures to correct your mistake.