The Art of Fingerspitzengefühl in Bookkeeping: Mastering Adjusting Entries with QuickBooks Online

Charles Stoy
Sep 26, 2024
3 min read

In the world of bookkeeping, Fingerspitzengefühl—that intuitive, almost instinctual grasp of a situation—can be an invaluable skill. As bookkeepers, we rely not only on technical knowledge but also on the nuanced, sometimes intangible ability to navigate complex financial systems with precision and foresight. Over time, as we gain experience, this “fingertip feel” develops into a powerful tool that helps us manage and adjust financial records seamlessly.

In QuickBooks Online (QBO), adjusting entries are a prime example of where Fingerspitzengefühl comes into play. Adjusting entries are essential to ensuring that a business's financial records reflect accurate information at the end of an accounting period. They require a sharp eye for detail, a deep understanding of the accounts involved, and an intuitive sense of where inconsistencies may lie.

In this blog post, I’ll dive into three detailed examples of adjusting entries using QuickBooks Online, demonstrating how I blend Fingerspitzengefühl with technical knowledge as a ProAdvisor to provide my clients with precise and tailored bookkeeping.

1. Adjusting for Prepaid Expenses: Aligning with the Period

Let’s say your client has paid for insurance in advance, but the expense needs to be allocated across several months. Without adjusting this entry, your client’s expenses won’t accurately reflect the period’s costs. Here’s where Fingerspitzengefühl comes into play: you can quickly spot that the prepaid insurance is a lump sum that needs to be broken down and spread out.

Adjusting Entry in QBO:

Step 1: Navigate to the Chart of Accounts.
Step 2: Locate the Prepaid Insurance account.
Step 3: Record a journal entry. Debit the Insurance Expense account for the current period’s portion and credit the Prepaid Insurance account for the same amount.

This adjustment reflects the expense in the proper period while ensuring that the balance sheet shows the remaining prepaid amount. Understanding which expenses to allocate and when to adjust requires more than just technical knowledge; it demands Fingerspitzengefühl to ensure the client’s financials align with reality.

2. Accruing Wages: Accounting for Unpaid Expenses

At the end of an accounting period, there may be wages earned by employees that haven’t yet been paid. As a bookkeeper, it’s crucial to accrue these wages to accurately reflect the company’s financial obligations. Here, Fingerspitzengefühl helps us recognize when wages have been earned but not recorded.

Adjusting Entry in QBO:

Step 1: Navigate to Journal Entries under the + New button.
Step 2: Debit Wages Expense to reflect the wages owed for the period.
Step 3: Credit Wages Payable for the same amount.

By accruing wages, you ensure that the client’s income statement correctly reflects labor costs and the balance sheet accounts for the liability. This adjustment requires awareness of payroll cycles and knowing which periods have not been fully accounted for—an example of how Fingerspitzengefühl sharpens your ability to align financial statements with real-time events.

3. Depreciation: Tracking Long-Term Asset Value

Depreciation is an essential part of bookkeeping, as it tracks the wear and tear on a company’s fixed assets over time. The challenge is ensuring the depreciation aligns with the business’s use of the asset. A well-developed Fingerspitzengefühl allows you to intuitively decide when to adjust depreciation and how to spread it accurately over time.

Adjusting Entry in QBO:

Step 1: Go to Gear Icon > Recurring Transactions and create a new Journal Entry.
Step 2: Debit Depreciation Expense for the depreciation of the asset during the period.
Step 3: Credit Accumulated Depreciation for the same amount.

Adjusting depreciation ensures the financial records reflect the true value of the assets and their impact on the company’s profitability. Knowing when to apply this adjustment, and ensuring it’s in line with the business’s financial health, is a hallmark of a bookkeeper with a strong sense of Fingerspitzengefühl.

Conclusion: The Art and Intuition of Adjusting Entries in QBO

Fingerspitzengefühl is more than just a vague feeling—it’s an invaluable skill that allows bookkeepers to anticipate, adjust, and correct financial records with precision. Whether it’s adjusting prepaid expenses, accruing wages, or tracking depreciation, this “fingertip feel” enables me to keep financial statements aligned with reality and support my clients in making sound decisions.

As a QuickBooks ProAdvisor, blending technical expertise with instinct is essential for effective bookkeeping. By maintaining a sharp awareness of your clients’ financials, you can adjust entries with confidence and accuracy.