How Do I Categorize a Return in QuickBooks Online?

You've mastered how to categorize a purchase or expense in QuickBooks Online. But what happens when you return something you purchased or got either a full or partial return? You categorize that transaction with the return to the same category that you originally categorized the purchase.

In the example in the above video, the original transaction was a $1200 backhoe rental. We categorized that to Equipment Rental. Then there was a $200 refund of the deposit when we returned the backhoe back to A1 Rental. Since we had originally categorized the entire $1200 to Equipment Rental, we will categorize the $200 deposit to Equipment Rental.

The initial rental and subsequent return of the equipment back to A1 Rental was as if you spent $1000 to rent the backhoe. You paid $1200 and got $200 back after you brought it back to the rental place. By categorizing $1200 and the $200 return to Equipment Rental, your net result of that will show Equipment Rental as $1000 spent.