Bookkeeping with QuickBooks (Lesson 27)

QuickBooks is the popular accounting software for small business.  The makers of QuickBooks have a vast knowledgebase and training program for users.

QuickBooks by Intuit is by far the best all around accounting software for small business. Intuit even creates industry specific versions of QuickBooks. The author personally endorses the Pro version due to the payroll feature and class accounting abilities.

There are multiple positive benefits of QuickBooks for the business and directly for the bookkeeper too. In addition many of the various issues covered in Lessons One through Twenty-Five are distinguishable in the features offered in QuickBooks. Finally, the report section of QuickBooks allows the bookkeeper the opportunity to present easy to read and understandable information. This lesson explains and illustrates each these positive benefits with QuickBooks.

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Business Benefits

The best attribute of QuickBooks is the universal acceptance by small business as the accounting software to use. There are more bookkeepers trained to use this accounting software than any other. In addition, it is pretty much a requirement for accountants and Certified Public Accountants to understand the in’s and out’s of this software. Intuit, the developer of QuickBooks uses a vast network of experts and knowledge bases to educate and solve problems related to this software.

QuickBooks solves the accounting software problem for any business operation with revenues as high as $10 Million. Intuit produces auxiliary software such as their retail version which integrates with the regular software. The retail version has a perpetual inventory system, purchase order system and accounts receivable schedule.

The value of all these attributes is really the overall cost effectiveness of utilizing QuickBooks. No other software can approach the value QuickBooks brings to the small business owner as an instrumental component of the accounting department.

QuickBooks’ Features

This lesson is not going to get into the details of the software. It is going to cover the major features that allow a bookkeeper to perform their job well.

Preferences

Once the software is installed and initiated the bookkeeper can control many of the accounting functions depending on the nature on the business. Once the company data file is opened the bookkeeper simply selects ‘File’ from the toolbar and opens ‘Edit Preferences’. In preferences there is a long list of major operational sections to address. The list includes the following:

• General – Identifies how fields are maneuvered between with the keyboard by selecting the appropriate key (tab or enter).
• Accounting – Select cash or accrual, will you use ‘Class Accounting’, which account is the primary checking account?
• Payroll – Select the payroll account, identify how vacation and sick time accrues.
• 1099’s – Select the types of payments made for Form 1099-M issues and printing thresholds.
• Job Costing – Indicate the desire to use this feature (desirable for construction or project driven business companies).
• Invoicing – Are you using estimates and percentage of completion methods of accounting?

There are about a dozen different operations that require decisions. Some are for management purposes but most can be made by the bookkeeper.

Lists

Lists in accounting are similar to the old fashion roll-a-deck used back in the 60’s and 70’s. It is simply a card that identifies a name, legal name, address(es), communication information and more. The four most often accessed lists include:

1. Employees – The software acts very similarly to the human resources employee file.
2. Customers – Similar to employee cards, the customer lists have shipping, mailing and invoicing addresses.
3. Vendors – The vendor list works just like the other two lists, it includes all outside suppliers, subcontractors and service providers. In addition, any economic activity is preset for the respective ledgers based on the vendor’s function.
4. Items – A particular list used for a limited focused inventory or service code to report on sales based on the respective item. In project accounting, the bookkeeper can create phase codes.

There are three other lists used. The difference is that these three lists control the accounting function for reporting information. These are:

• Chart of Accounts – Each account is assigned one of six types of accounts (Lesson 1) and the corresponding group. This list allows the bookkeeper to organize the information in a well laid out trial balance and ultimately reports. The bookkeeper can set up parent-child structures, control accounts and temporary accounts.
• Class Accounting – If class accounting is turned on in preferences class accounting allows the bookkeeper to assign profit centers for the business. This is very beneficial to management in identifying performance from the respective divisions within the company.
• Jobs – This is a mirror image of customers except the purpose isn’t to invoice the job, the purpose is to identify costs incurred for the respected project. This list provides the base identifier for a whole group of reports.

One final list item is called ‘Other’. Most often this isn’t used but I encourage bookkeepers to list the following important groups:

Owners – This allows for easier capital account balance tracking and as a source of information for contacts and legal name for check writing.

Locations of Facilities – A list of business owned facilities and their respective addresses, phone numbers and head managers

Pseudo Names – Names created for the purpose of temporary purposes. A good example is a nickname for the owner to write checks to for petty cash withdrawals or advanced cash for purchases.

General

This section allows the bookkeeper the opportunity to properly identify the business information such as legal name, trading name, Federal Identification Number (EIN), tax status and more. In addition, the software has a users section identifying the master administrator and the various allowed users. A bookkeeper should never act as the master administrator, only the owner performs this duty.

Vendors, Customers and Employees

These three separate functions basically record the day to day activities of the business using the names from the lists from above. The bookkeeper enters the data via these three functions for sales, expenses and labor. All three functions allow the bookkeeper to edit the respected lists from within the function.

Banking

A separate function allows the bookkeeper access to the bank ledgers via registers for the respected accounts. Reconciliations are performed with this function as well as voiding and deleting checks. This section even has a transfer function between accounts mimicking the physical transaction.

Reports

The absolute best part of any accounting software are reports. QuickBooks has a built-in set of reports for each of the major functions of operations. In addition, there is a set of financial reports including the standard balance sheet and income statement.

The one area of reports preferred is the accountant’s section. It is here a bookkeeper can create highly customized reports and memorize them for future use. At first glance customizing a report looks daunting. But once you play with the control features (usually about one hour of time), it gets real easy to generate highly detailed and informative reports. One of the most important reports within the accountant’s group is the trial balance. This report verifies dual entry balance in the aggregate, confirmation of an error free ledger list and good organization related to the chart of accounts.

Other reporting attributes include the ability to export information to a spreadsheet for further data sorting or organizational presentation.

Summary – QuickBooks

QuickBooks is by far the best software for small business in the market. Intuit, the maker of QuickBooks, has developed a vast support system to help owners, accountants and bookkeepers use the software. Overall, the software is the best bang for the buck due to its economy of scale.

Not only is the software cost effective, the software uses a functional interface with the user. All daily activity is conducted via the vendor/customer/employee input screens. The best attribute of the software is the report writing abilities. No other software gives so much discretion to the bookkeeper in preparing reports. ACT ON KNOWLEDGE.