When an invoice is pushed to QuickBooks, here's what happens to your accounts:
For Each Product on the Invoice:
If the product doesn't exist in QuickBooks, we create it as a "Non-Inventory Item"
The product is linked to two accounts:
Your Income Account (where sales revenue is recorded)
Your Expense Account (where cost of goods sold is tracked)
2. When the Invoice is Created:
The total amount of the invoice is recorded as a credit to your Income Account
Each line item's cost is recorded as a debit to your Expense Account
If there's tax on the invoice, it's recorded in your Tax Payable account
If there's shipping, it's recorded in your Shipping Revenue account
3. Payment Handling:
When a payment is received, it's recorded as a debit to your Cash/Bank account
The corresponding credit reduces the Accounts Receivable balance
If you're accepting credit card or ACH payments, these are tracked separately but still affect the same accounts
4. Special Cases:
If there are discounts on the invoice, they reduce the Income Account
If there's shipping cost, it's recorded as an expense
Any tax collected is tracked separately until it's time to remit it
The key thing to understand is that this integration ensures your QuickBooks accounts stay in sync with your sales and payments, making it easier to track your revenue and expenses accurately.