Accrual Accounting in QuickBooks Online (QBO)

Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs vs. when payment is received or made. 

If your organization uses accrual accounting and would like to have it enabled for QuickBooks Online (QBO), reach out to your Turvo representative.

Accrual Accounting with QBO

Turvo creates a journal entry in QBO once the shipment is Route Complete. Once an invoice is created, Turvo removes any journal entries and creates a counter invoice in QBO. 

You need the following 4 accounts to create Accrual entries for Carrier and Customer Order blocks:

  • Accrual Carrier Cost Account
  • Accrual Expense Account
  • Accrual Customer Cost Account
  • Accrual Revenue Account

Prerequisites for Accrual Accounting with QBO

  1. Complete the QBO setup process on the Intuit Developer Site
  2. Complete the QBO setup process in the Integration hub
  3. Within your QBO Chart of Accounts, create four accrual accounts. Read the instructions carefully on what type of accounts these should be:

    • Accrued Carrier Cost: this has to be created as an expense account

    • Accrued Carrier Expense: this has to be as a liability account

    • Accrued Customer Cost: this has to be created as a revenue account (ie, create the account under Income category)

    • Accrued Customer Revenue: this has to be created as an asset account.

  4. Create a Support Ticket, with including the name of the accrual accounts.
  5. The Support Team executes a configuration on the backend to set up the accrual accounting and once confirmed, you can test.
  6. Use the instructions below to test your integration.

Testing Steps for Accrual Based Workflow

Once your QBO accrual set up is complete, use the below steps to validate the integration in your Turvo production environment:

  1. Create a shipment that has carrier and customer costs.
  2. Update the shipment with respective pickup and delivery milestones until the shipment has reached the Route Complete status.
  3. Within Quickbooks, ensure there are journal entries created for both the customer and the carrier on the shipment.
  4. At this point in the lifecycle of a shipment, the POD is uploaded along with the carrier invoice.
    Note: Ensure the invoice is in the Approved document status as this is what triggers the sync to QBO.
  5. Within Quickbooks, ensure that the initial journal entry for the carrier has a reversal entry created.
  6. Next, in the shipment within Turvo, click on the Documents tab to create the customer invoice.
    Note: Ensure the invoice is in the Approved document status as this is what triggers the sync to QBO.
  7. Within Quickbooks, ensure that the initial journal entry for the customer has a reversal entry created.
  8. Regarding the testing of payment records, please refer to QBO 2.0: Post Setup,Testing, FAQs, and Troubleshooting for testing steps. 

Accrual Accounting Process in Turvo

Turvo creates a journal entry in QBO once the shipment is Route Complete. Once an invoice is created, Turvo removes any journal entries and creates a counter invoice in QBO.

Carrier

Note: All the cost line items in the Carrier Cost block are summed up together and routed to the Accrual Carrier Cost account that is chosen, in the example above, it’s Carrier Costs.

Customer

Note: All the cost line items in the Customer Cost block are summed up together and routed to the Accrual Customer Cost account that is chosen, in the example above, it’s Truckload Revenue.

When a carrier invoice is created against the shipment, Turvo negates the journal entries created previously by creating a reversal entry as follows:

Turvo also creates an invoice within the QBO account. From this point, it is the invoice that gets considered for accounting. Payments, if any, are recorded against the invoice.

Similarly, when a customer invoice is created against the shipment, Turvo negates the journal entry created previously by creating a reversal entry as follows:

Turvo also creates an invoice within the QBO account. From this point, it is the invoice that gets considered for accounting. Payments, if any, are recorded against the invoice.

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