Quickbooks Notes for Ch. 1-4 PDF

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QuickBooks Notes (Ch. 1-4) Chapter 1 QuickBooks allows companies to:         

Track customers, vendors, employees, etc. Process sales transactions and cash receipts Process purchase transactions and payments to vendors Run payroll Track and sell inventory Run end-of-period financial reports Track assets (what you own) and liabilities (what you owe) Keep track of bank accounts Collaborate with accountants easily and efficiently

Editions of QuickBooks:  

Desktop: Accounting, QB Pro, QB Premier (more industry specific), QB Enterprise (aimed at larger companies) Online: gives more flexibility and immediate access, automatic remote backup, up-to-date company files – Self-Employed, Simple Start, Essentials, and Plus

Types of Tasks 

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Those that affect the accounting behind the scenes o Activities – invoicing clients, depositing a bill, etc.  QB does the journal entry behind the scenes o Company setup Those that do NOT affect the accounting behind the scenes o Lists (databases) – inventory pricing items, taxes, vendors, assets o Reports – just grabs info from BTS and brings it to you

Accounting Basics  

QB is based on accounting basics Basic accounting knowledge will: o Help you set up your company o Provide a better picture of the health of the business

GAAP – Generally Accepted Accounting Principles   

Rules used to prepare, present, and report financial statements for a variety of entities Created by FASB (financial accounting standards board) Consists of assumptions, principles, and constraints

From an Accounting Perspective  

Confer with an accountant Understanding accounting terms: debits, credits, and T-accounts

o o o

Debits listed on the left side of a T-account, whereas credits are listed on the right Debits = assets & expenses Credits = liability, income, equity

Accrual vs. Cash Basis Accounting   

The method used depends on nature of the business The data entry and producing reports are the same Use an accountant or tax advisor to help determine which method to use o Accrual Basis: income recorded when sale is made, expenses are recorded when accrued o Cash Basis: income is recorded when cash is received, expenses recorded when cash is paid  more popular for service companies o You can change your report from accrual to cash basis in QB

Following a Transaction Path 

To balance: an amount in one account must have the same amount balanced in another account

Managing Basic QuickBooks Files 

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Types of QB files o Company file (QBW) – working file, decompressed o Portable company file (QBM) – restore this file; shrinks company file into small enough file to go into a thumb drive o Backup file (QBB) – backup file; want to back it up daily but it depends on how many transactions you have  don’t want to backup your file in the same place as your QBW because if your computer crashes, you lose the QBW and the backup o Data file (ND) – when you restore your QBM, the data and transaction log are created o Transaction log (TLG) – keeps track of whatever you do; can also use this to restore if your system crashes Opening and restoring QB files o Open or restore a file using the File menu

The QB Icon Bar 

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Provides quick access to QB centers, snapshots, shortcuts, apps, and services o QB Calendar – keep up with deadlines o The open window list and working with multiple monitors The insights tab: provides comprehensive overview of the business (snapshot of your system)

Backing Up and Updating Your Company File   

Important to avoid transaction and financial data loss o Best practice: back up at least weekly Backup location o Back up to a location that’s different from where you store your company file Protecting your data online o Intuit data protect – an online subscription service

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When to save a backup copy—three options o Save it now o Save it now and schedule future backups o Schedule only future backups Updating your QB company file o Free updates are avialalble throughout the life of the version o Verify the QB Release Number using the [F2] key – gives you your license number, registration, etc.

Chapter 2 Customer Center Creating and Editing Customers and Adding Jobs 

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Creating a new customer o Set up defaults for specific customer info o *you can use the Quick Add feature to add a customer right from an invoice or sales receipt Add a job for a customer o Create multiple jobs for repeat customers to track individual job costs Edit an existing customer Delete a customer You may have a customer entered multiple times with different spellings o Transactions under each customer can be merged, selecting the correct spelling o Jobs under each customer CANNOT be merged  Move from one name to the other

The Income Tracker 

Provides an overall picture of customer activity

Working with Lists 

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Creating items o Service: services purchased and sold o Non-inventory part: items that are bought but not stocked as inventory o Inventory part: items that are bought, tracked, and sold o Other charge: miscellaneous labor, material, or part charges Create a subitem o Allows you to group various services or items under a general term

Selecting the correct form for customer sales  

Creating invoices  debits A/R and credits the selected customer’s subregister Create a sales receipt for a customer o Use when a customer paid with cash

o

Affects the undeposited funds account – temporary holding account; have the funds but not deposited yet

Receiving Payments  using this will credit A/R and the appropriate customer sub-register  

Options for accepting payments o Several options are available including gift cards The undeposited funds account o Created automatically for all payments received o Reconciled automatically after funds are deposited o If it’s a self-reconciling account, meaning that after you deposit the funds using the record deposit or make deposit task, Undeposited Funds will be affected automatically

Adjusting Customer Transactions 

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Editing an existing transaction o Make changes in the window where the transaction is recorded o Think about transactions that may be affected by the change; for example, an invoice and payment are linked Voiding vs. deleting transactions o Voiding lets you keep a record of the transaction, but removes everything from behind the scenes (everything becomes 0) o Deleting = you don’t see it anywhere but you can check your audit trail Locating transactions in QB o Use Find if you don’t know all the info about it o Use Search to look for add’l types of info o Fixing errors (check slide image below)

Easy fix by deleting the deposit ** Flashback to GAAP: Prudence o Remember that if you need to choose between two solutions, pick the one that’s les likely to overstate assets and income

*memorize a report instead of saving  

Can memorize a report and create a schedule  look at scheduled reports QuickReport  good for looking at ledgers o Can be run from various center windows o Shows all transactions recorded for a center or account

Chapter 3 The Vendor Center  looks just like a Customer Center, except now it says Vendor The Vendor List  

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Setting up default (rent, inventory, training & development, etc) expense accounts for a vendor Editing an existing vendor o You CANNOT edit the opening balance o Have to use journal entry to adjust the balance Deleting a vendor o You can only delete a vendor if it has NOT been used in a transaction Making a vendor inactive o Inactive vendors can be reactivated

Entering Bills  

Transactions entered into the Enter Bills window credits A/P The importance of entering reference numbers and memos o The first memo field is info that prints on a check o The second memo field is used internally for tracking

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Passing on expenses to customers o Choose which expenses are billable in the Enter Bills window

Paying Bills   

Using the Pay Bills window debits A/P Payment details – choose payment date, payment method, payment account o Debit account acts the same as Check The payment summary window -> populates check for you

Writing and Printing Checks 

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If using the Cash basis of accounting: o You can write a check and expense it to the proper account o If writing check where no bill was entered in QB, you will NOT use the Pay Bills feature  Need to delete/void check and go back into Pay Bills window and pay back the invoice You must decide which account to use to issue the check and whether to print the check now or later Print checks setup o Align your checks to the printer Printing checks o Choose which checks to print

Editing Vendor Transactions   

The Open Bills Exist window displays a warning when trying to write a check Fixing Errors

Producing Vendor and Profit & Loss Reports 

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QB has many reports o List reports o Summary reports o Transaction reports The profit & loss (P&L) report o Reflects all transactions that affected the income and expense accounts

Chapter 4 Moving Funds Between Accounts 

Transferring between two asset accounts o Debit the account that’s increasing o Credit the account that’s decreasing  Ex) transferring funds from Checking to Savings: debit the Savings and credit Checking

Working with an Account Register 

Most balance sheets have their own register o This is a record of all transactions for an account o It looks like a check register o Checkmark means it’s been reconciled

The Chart of Accounts  

This is composed of all asset, liability, equity, income, and expense accounts Only balance sheet accounts display a balance in the Chart of Accounts

Creating and Editing Accounts  

A main account type must be specified for new accounts o This affects all transactions and reports An account should be made inactive instead of being deleted o Need to do journal entries to reverse all entries and then delete; but it’s not advisable to delete

Making Deposits  debit Checking account 

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This is the last step in the cycle of a sale o Make a sale o Receive the money o Deposit the money There is an interim step between receiving and depositing the money o You need to clear the Undeposited Funds account using the Make Deposits window

Managing Credit and Debit Card Transactions

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Type of account and normal balance Using a Debit Card for transactions o Debit card = asset o Credit card = liability  Credit (increase) the account when you make a purchase & debit (decrease) the account when you make a payment o If a bill is paid with a debit card, the payment must be entered through the Pay Bills window  AKA: if you purchase/pay with a DEBIT CARD and you use “Enter Bills”, then you enter the payment through “Pay Bills”  If you didn’t use “Enter Bills”, you could use “Write Checks” to pay the bill Paying a bill with a credit card o Use the enter credit card charges window to pay a vendor with a credit card

Dealing with Bounced Checks 

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How you handle a bounced check depends on how the check was received o The customer was invoiced for the purchase o A check was received on a sales receipt Send the customer a new invoice or statement showing the bounced check and fees

Reconciling Accounts 

When your accounts don’t match o Locating discrepancies  Run a reconciliation discrepancy report o Problem resolution process  Look for transaction with same amount of difference  Compare to your bank statement with the QB reconciliation window  Determine if it’s a bank error o Reconciling credit cards  Use the same method or the Chart of Accounts

Fixing Banking Transactions

Working with Banking and Balance Sheet Reports     

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Banking reports o Get answers from the data QuickReports from the register o Shows all transactions for the payee, vendor, or customer for a selected transaction Reconciliation reports Alternatives to printing reports o You can email, create an Excel file, or save as a PDF Balance sheet reports o Types of accounts displayed on a balance sheet report  Asset, liability and equity accounts Company snapshot o Quick view of the company’s bottom line

Importing Banking Transactions into QB 

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There are two methods: manually or via the automated Bank Feeds feature o The modes of bank feeds  Express  Classic o Bank feeds and reconciliation  The majority of transactions are already matched  Reconciliation will be easier Setting up bank feeds in QB o QB will guide you through four steps o QB will link an account at a financial institution to an account in the Chart of Accounts Matching and recording bank feeds

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o Download bank account transactions and match them to QB transactions QB doc center  not secure so make sure you don’t upload private documents o Add scanned or stored documents...