working · Lesson 6 · 8 min
Money in and out without invoices
Transfers, owner draws, loan proceeds, merchant payouts, and refunds each have a home. “Miscellaneous” is not it.
Transfers
Moving $5,000 from checking to savings is debit savings, credit checking. In Xero use Transfer on the reconcile screen so both bank accounts rec. In QBO use Transfer. Never income one side and expense the other — profit would be fictional and both recs would fight you.
Owner drawings and contributions
An owner taking $2,000 from checking is debit Owner drawings (equity, debit-normal), credit Checking. It is not wages (no payroll tax) and not an expense (it does not hit the P&L). A contribution is the opposite: debit bank, credit Owner contributions. Sole props and single-member LLCs live here. Payroll is for people who are employees — including an S-corp owner who must take reasonable wage.
| Account | Debit | Credit |
|---|---|---|
| 3200 Owner drawings | $2,000.00 | |
| 1000 Checking | $2,000.00 | |
| Totals | $2,000.00 | $2,000.00 |
Merchant payouts
Stripe deposits $970 because it took $30 of fees on $1,000 of invoice payments. Two clean patterns: (1) match the $970 to invoices totaling $1,000 and add a $30 fee line, or (2) run a clearing account: invoices debit clearing, payouts credit clearing, fees expense the residue to zero. Do not code the $970 to income — invoices already did.
Refunds and bounced payments
A customer refund against an invoice is a credit note allocated to that invoice, then a payment out (or a reduced batch). A bounced ACH re-opens the invoice (or a journal back to AR) and often a bank fee. Do not delete the original invoice if it was a real sale; the history is the audit trail.
Check
Choices shuffle each visit. Misses send you back to the section — Look back clears the quiz so you can try again.
Choose an answer, then check.
Owner drawings belong on the:
Practice: Owner draw, Merchant clearing