HBA 2403 COMPUTERISED ACCOUNTING (45 CONTACT HOURS)

Prerequisite: HBC 2101 Introduction to Accounting

Course Purpose
Students will use computer applications to facilitate financial reporting and analysis.
Learning Outcomes
At the end of the course it is expected that the student should be able to:
i. Carry out the accounting cycle based on specific accounting packages
ii. Compute various financial ratios and other measures and carry out financial analysis
based on specific accounting packages
iii. Explain how computers can be used to audit around, with and through the computers.
Course Description
Introduction: Relation between accounting theory and actual accounting applications. Utilizing flow
charts to understand process flow, security (internal accounting control weaknesses) needs analysis.
Changing from manual accounting system to computerized accounting including charts of accounts
structure, prepare inventory, employee vendor and closing customer data; closing old financial system
which allows for the beginning balance input. An in-depth understanding of a minimum of three (3)
accounting programs including fixed asset management, a fully integrated accounting program and an
auditing package. Using computerised accounting programs along with spreadsheets. Understanding
the relationship between internal control, computers and computer security.
Purpose of the course

To overview the information systems that support the business financial accounting systems of an
organization and to provide practical skills in accounting information systems development and use.

I. Overview of Computerized accounting information

systems
A. Introduction to Computerized Accounting Information Systems
B. Accounting Methods and Objectives
C. The accounting process

II. Accounting Transaction Cycles A.

Introduction to Accounting Cycles
B. The cycles of business Activities
C. Transaction Cycles; Financial, Expenditure, conversion and revenue cycles

III. Developing Accounting Systems A.

Qualities of a successful system
B. Accounting Information systems development approaches

IV. Setting up A QuickBooks

business/company
A. Creating a Company
B. Creating customers vendors and items lists
 C. Numbering accounts in QuickBooks

V. Main QuickBooks features. A.

QuickBooks working area
B. QuickBooks customers, vendor and employee centers
C. Using QuickBooks help

VI. QuickBooks basics

A. Working with QuickBooks lists
B. Paying bills
C. Essential tasks such as Adding an Account
D. Income and Expense accounts and Balance sheet accounts
E. Setting up sales tax
F. Setting up payroll

VII. QuickBooks Operating Features A.

Creating an Estimate
B. Creating an Invoice
C. Processing sales and receiving payments
D. Writing checks and paying employees
E. Preparing QuickBooks reports such as Trial balance, Trading profit and loss account and balance
sheet

Main course text

Romney and Steinbart, Accounting Information Systems, 2008, Prentice Hall Business Publishing

Assessment: Examination - 70%: Coursework - 30%

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 CHAPTER ONE

OVERVIEW OF COMPUTERISED ACCOUNTING INFORMATION SYSTEMS

Learning Objectives

By the end of this chapter the learner shall be able to;

i. Define an Accounting Information system (CAIS) and explain the functions of CAIS
ii. Explain theAccounting methods and objectives
iii. Explain theAccounting process

Introduction

Computerized accounting (CAIS) is a system that collects, records, stores, and processes data to
produce information for decision makers. It can: Use advanced technology; or be a simple paper-and-
pencil system; or, be something in between, technology is simply a tool to create, maintain, or improve
a system.
The functions of CAIS are to:
Collect and store data about events, resources, and agents.
Transform that data into information that management can use to make
decisions about events, resources, and agents.
Provide adequate controls to ensure that the entity’s resources (including data)
are available when needed, Accurate and reliable

The study of accounting information systems analyzes how events affecting an organization are
recorded, summarized, and reported. These events are recorded using that organization’s system of
human and computer resources, summarized using accounting methods and objectives, and
reported as information to interested persons both within and outside of the organization.
Accounting information systems exist in many forms of organizations, whether proprietorships,
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partnerships, corporations, nonprofit foundations, or households. While the complexity of each
Computerized accounting differs, each is similar in three important ways: Each contains a similar
structure (of human and computer resources), similar processes (the use of accounting methods),
and similar purposes (to provide information).

1.1 Accounting Methods and Objectives

All accounting information systems record, process, and report events using accounting methods
to achieve accounting objectives. These objectives determine the system’s scope, which in turn
determines the nature of the events and the method of accounting. However, all systems record
events in money and use the same conceptual accounting process.

For the publicly held corporation, the accounting information system’s scope must comply with
generally accepted accounting principles (GAAP). GAAP is necessary to produce financial
statements intended for parties external to the organization. With ‖GAAR any event that has a
determinable monetary impact on the organization must be recognized as an accounting
transaction. A system whose objective is to record, process, and report past transactions as
financial statements in accordance with GAAP is a financial accounting information system. A
Usually the scope of an organization’s system for processing data is broader than & that required
by GAAP. For example, when an accounting system includes budgetary forecasts, it recognizes
future transactions and estimates their monetary impact. Whether short-term annual budgets or
long-term ones, budgets provide vital financial information for managing the organization.
Budgeting and other such accounting systems intended primarily for use within the organization
constitute managerial accounting information systems. Both the financial and the managerial
systems are components of the organization’s management information system (MIS). The MIS
is the combination of people, procedures, and machines intended to provide information for
management decision making. It recognizes events beyond those of a purely financial nature.

1.2 The Accounting Process

The accounting process begins when an economic event is recognized by an accounting
information system, which records the economic event as an accounting transaction. This module
illustrates how the system’s human and computer components process a transaction. For financial
accounting information systems, the activities that process a transaction constitute the accounting
cycle. Conceptually, the accounting cycle consists of the following six steps.
Journalize. The first step in the accounting cycle, journalizing is recording the transaction.
Someone analyzes the event, determines the accounts it affects, identifies whether each account is
debited or credited, and enters the transaction chronologically in a journal processing. Common
special journals include the cash receipts journal, the cash disbursements journal, the payroll
journal, and the sales journal. Each organization has a chart of accounts, which is a list of all
account titles maintained in the accounting system. In journalizing an event, the accountant must
choose accounts from this list. An analyst establishes this list at the time the accounting
information systems are created.

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Post. In posting, the second step, an Computerised accounting transfers journal entries to ledgers.
A ledger is a summary, by account, of all transactions affecting that account. Thus, after posting,
transactions are recorded by account rather than in chronological sequence. This step makes it
possible to summarize the effects of all the events affecting the organization. The Illustration
below shows a page from a manual system’s ledger. Most organizations also use subsidiary
ledgers, which contain detailed information explaining the general ledger’s control account total.
Common subsidiary ledgers include the accounts payable subsidiary ledger, the property ledger,
among others.

Prepare a Trial Balance. This is step three in the accounting cycle. During an accounting
period, Accounting information systems journalize and post a large number of transactions. Prior
to producing accounting reports, the system summarizes the effect of all the events in a trial
balance.
Prepare Adjusting Entries. The fourth step in the accounting cycle is the preparation of adjusting
entries. Sometimes accountants make these journal entries at the end of a reporting period to match the
expenses of the period with the revenues generated by them. Other adjusting entries correct previous
errors in journalizing transactions. An accountant or bookkeeper prepares adjusting entries, records
them in the journal, and posts them to the ledger. These alter the account balances shown in the trial
balance.
Prepare Adjusting Entries. The fourth step in the accounting cycle is the preparation of adjusting
entries. Sometimes accountants make these journal entries at the end of a reporting period to match the
expenses of the period with the revenues generated by them. Other adjusting entries correct previous
errors in journalizing transactions. An accountant or bookkeeper prepares adjusting entries, records

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them in the journal, and posts them to the ledger. These alter the account balances shown in the trial
balance.

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 CHAPTER TWO

ACCOUNTING TRANSACTION CYCLES

Learning Objectives

By the end of this chapter the learner shall be able to;

i. Explain the relevance of accounting cycles in business organizations today

ii. Explain the economic activities engaged by organizations

iii. Explain the concept of transaction cycles such as Financial, Expenditure, conversion and
revenue cycles.

2.1 Introduction to accounting cycles

This chapter will describe the technology that accounting information systems use and the
information system controls that prevent and detect errors and threats to these systems. To make
it easier to under- my stand these procedures, they are structured by accounting transaction cycle.
Different accountants describe transaction cycles in different ways. Transaction cycles emphasize
the continuous nature of all business and accounting processes. Transaction cycles demonstrate
how events early in a transaction cycle affect events and records later in the cycle. A weakness in
internal control affecting a transaction may mean that records created later in that same cycle are
misstated.

Accounting systems are designed to record summarize, and report the results of economic events
for a wide range of organizations. Even though businesses differ in their operations, all of them
engage in a cycle of business activities. Each activity has certain economic events common to
most; these economic events produce accounting transactions that must be processed by the
accounting system.
2.2 The cycles of Business Activities
As mentioned earlier all businesses engage in a cycle of business activities that are common to most
businesses. These activities are; Capital investment, input acquisition, conversion and sales.

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Capital Investment. The cycle of business activities begins when capital is invested in a business.
Generally accepted accounting principles (GAAP) require recognizing the business as an entity
separate from the sources of this capital. These sources may be the owners of the business, or they
may be creditors. If the source is the owners, the investment is owners’ equity. If the source is
creditors, the investment is either longterm debt or current liabilities. In many businesses, most of
the capital is used to purchase long-term productive assets. The business uses the productive assets
to increase its capital. Periodically, the business reports the results of its operations to the sources
of its capital. Capital investment comprises two significant economic events: raising capital and
using capital to acquire productive assets. Another event that occurs during this activity is not
economic in the sense of the other two: Periodically the business reports to its sources of capital.
This is necessary to maintain those sources when additional capital is needed later.

Input Acquisition. The second component of the cycle of business activities is the acquisition of
materials and overhead items such as supplies. These inputs are used to increase the capital of the
business. The exact way in which they are used is not important at this point; they are used differently
for different businesses. Most organizations operate on credit—that is, when a business purchases
inputs, it receives the inputs in return for a promise to pay for them. The business records an obligation
to pay and pays for them at a later date. So, the activity of input acquisition has these four economic
events: ordering of inputs, receiving them, recording an obligation to pay for them, and paying for
them.

Conversion. The next step in the cycle of activities is the conversion of inputs into goods or
services. The business sells these to increase its capital. The conversion process is different for
different businesses. Manufacturing companies buy raw material inventories, apply labor and
overhead to them, and produce an output different from the material purchased. Service
companies convert inputs that are predominantly labor into outputs in the form of services. In
contrast, the conversion process of merchandising companies (retailers and wholesalers) uses
relatively little labor. These organizations purchase inventories of goods, repackage them, and
then market them. All three businesses use inventories of supplies in their conversion processes.
One economic event taking place during conversion is the consumption of labor materials, and
overhead to produce a salable product or service.

Sales. The final component in the cycle of basic business activities is the sale of the goods or
services that were outputs of the conversion process. When these are sold at profit, the capital
investment of the business increases. Additional cash is available for reinvestment, or for making
payments to the sources of capital in the form of dividends and interest. By providing a source of
additional capital, the sales component completes the cycle of business activities. The sale of goods
or services consists of four economic events: receiving a customer order, delivering goods to the
customer, requesting payment for the goods, and receiving payment.

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Summary

Normal business operation consists of a series of economic events. This series results from the
cycle of business activities that describes how all accounting entities operate. An accounting
system records economic events in the form of accounting transactions, summarizes those
transactions, and reports them in some useful way. Thus, you can consider business activities as
cycles of accounting transactions. In fact, the study of transaction cycles is a convenient way to
understand how most accounting systems work.

2.3 Transaction Cycles

A transaction cycle is a set of accounting transactions that occur in a normal sequence. They record
the economic events of a component in the cycle of business activities. For example, a sales
transaction is normally followed by a shipping transaction, a billing transaction, and a cash receipts
transaction. These constitute a cycle.

The four accounting transaction cycles are; the financial cycle, the expenditure cycle, the
conversion cycle, and the revenue cycle.
Financial Cycle. The financial cycle consists of those accounting transactions that record the
acquisition of capital from owners and creditors, the use of that capital to acquire productive assets,
and the reporting to owners and creditors on how it is used.

The two significant economic events in the financial cycle are raising capital and using that capital
to acquire property, plant, and equipment. A third event—not really an economic one—is periodic
reporting to the sources of capital. The basic financial statements provide periodic reporting.
These statements include the balance sheet, the income statement, and the statement of cash flows.
The summaries in these statements come from the general ledger. Periodic reporting to the sources
of capital enables a business to raise additional capital. For this reason, you can view the series of
transactions as a cycle.

The three accounting application systems that record the events in the financial cycle are the
property the journal entry, and the financial reporting systems.

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Expenditure Cycle. The expenditure cycle consists of those transactions incurred to acquire material and
overhead items for the conversion process of the business. This processes transactions representing the
following economic events: requesting the items, receiving the items, recording the obligation to pay for
the items, and paying for them. Most businesses use a purchasing department to acquire materials and
supplies. A purchasing agent orders material from a vendor, who ships the material and mails an invoice.
The business uses the invoice to record the payable and later pays the vendor. When the vendor is paid
according to the terms of the sale, the vendor again sells items to the business. This causes the sequence of
transactions to form a cycle.

Revenue Cycle. The revenue cycle includes the accounting transactions that record the generation of
revenue from the outputs of the conversion process. As mentioned earlier, these four economic events
generate revenue: receiving an order from a customer, delivering goods or services to the customer,
requesting payment from the customer, and receiving the payment. Whenever companies sell goods or
services on credit, each of these events produces a transaction. Each transaction may occur at separate
times. If the sale is a cash sale, then ordering, delivery, request, and payment occur at the same time. In this
case, accounting systems ordinarily record these four events with one transaction. When a customer pays
and the accounting system records the cash receipt, the business is willing to sell again to the customer.
This causes the cycle of transactions to repeat.

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Conversion Cycle. The conversion cycle contains those transactions incurred when inputs are
converted into salable goods or services. One economic event exists in the conversion cycle.
Materials, labor, and overhead are consumed in the conversion process. In manufacturing and
service companies, either actual or standard material and labor costs are recorded in a cost ledger
as conversion occurs. Overhead costs are allocated in the cost ledger, usually based on the
amount of labor used. These costs become associated with the products and are matched with
revenue when the products are sold.

In merchandising companies, costs of conversion are recorded when incurred and matched
against revenue in the same period. Depending on the type of organization, the conversion cycle
contains either two or three application systems. Manufacturing and service companies use the
cost accounting system to record material, labor, and overhead costs. All types of organizations
use the payroll system. It ensures that employees are paid for their labor. Manufacturing and
merchandising companies use the inventory system to maintain records of inventory on hand. In
merchandising and manufacturing companies, the systems of the conversion cycle provide
interfaces between the expenditure and revenue cycles. Because it contains only one event, the
conversion cycle cannot be represented as a circle as can the other cycles.

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 CHAPTER THREE

DEVELOPING ACCOUNTING SYSTEMS

Learning Objectives

By the end of this chapter the learner shall be able to;

 Explain the alternative methods for creating accounting information systems
 Explain the qualities of a successful information system.
 Explain the phases that make up the system development life cycle.
 Explain the alternative methods for developing information systems.

Introduction

Accountants commonly apply the systems approach in the development of new information
systems. Many organizations implement the systems approach in a formal process called the system
development life cycle. Accountants have been creating accounting systems for hundreds of years;
the double entry system originated in Italy before Columbus discovered America. But the relatively
recent adoption of computer technology in accounting has forced accountants to be more attentive to
the methods used in developing accounting systems. The issues addressed in this chapter are; how
can one avoid participating in a failure? Which steps are necessary to successfully implement an
accounting system?

3.1 The qualities of a successful system

No Computerized accounting System is completely successful or totally unsuccessful. In this
context, success is a relative quality: A system is successful if it achieves most of the goals set out
for it. In general, Computerized accounting system is successful if it achieves four objectives.
First, it should produce correct and timely information. Second, it should be developed within a
reasonable amount of time. Third, the system should meet the organization’s needs for
information. And finally, users should be satisfied with it. These qualities, and some methods of
achieving them, are summarized below.

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3.2 Accounting Information systems development approaches
A number of approaches could be used in developing accounting information systems as discussed
below;

Systems Development Life Cycle

The Systems Life Cycle (SLC) is a type of methodology used to describe the process for building
information systems, intended to develop information systems in a very deliberate, structured and
methodical way, reiterating each stage of the life cycle.

The stages of SDLC are;

Project planning, feasibility study: Establishes a high-level view of the intended project and
determines its goals.

Systems analysis, requirements definition: Defines project goals into defined functions
and operation of the intended application. Analyzes end-user information needs.

Systems design: Describes desired features and operations in detail, including screen layouts,
business rules, process diagrams, pseudocode and other documentation.

Implementation: The real code is written here.

Integration and testing: Brings all the pieces together into a special testing environment, then
checks for errors, bugs and interoperability.
Acceptance, installation, deployment: The final stage of initial development, where the
software is put into production and runs actual business.

Maintenance: What happens during the rest of the software's life: changes, correction,
additions, moves to a different computing platform and more. This, the least glamorous
and perhaps most important step of all, goes on seemingly forever.

Rapid application development

Rapid application development (RAD) is a software development methodology that uses minimal
planning in favor of rapid prototyping.

In rapid application development, structured techniques and prototyping are especially used to
define users' requirements and to design the final system. The development process starts with the
development of preliminary data models and business process models using structured techniques.
In the next stage, requirements are verified using prototyping, eventually to refine the data and
process models. These stages are repeated iteratively; further development results in "a combined
business requirements and technical design statement to be used for constructing new systems".

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Object-oriented Aprroach
Object-oriented programming (OOP) is a programming paradigm using "objects" – data structures
consisting of data fields and methods together with their interactions – to design applications and
computer programs. Programming techniques may include features such as data abstraction,
encapsulation, messaging, modularity, polymorphism, and inheritance. Many modern
programming languages now support OOP.

CHAPTER FOUR

SETTING UP A QUICKBOOKS BUSINESS

Learning Objectives

By the end of this chapter the learner shall be able to;

i. Create a company in QuickBooks

ii. Review chart of Accounts
iii. Create customers vendors and items lists
iv. Number accounts in QuickBooks

4.1 Getting started Checklist

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15
4.2 Creating your company file
To create your company file:

➊ Start QuickBooks by double-clicking the QuickBooks icon on the desktop or clicking the
Windows Start button and then clicking QuickBooks from the Programs group.

➋ Click Create a new company file, or go to the File menu and click New Company.

➌ The Welcome screen for the EasyStep Interview opens. Click Start Interview.
Note: We recommend that you do not skip the interview process. The more information you enter
with the EasyStep Interview, the more accurate your company file will be when you begin to use
QuickBooks for your business. However, if you are an experienced QuickBooks user and prefer to
create your company file manually, you can skip the EasyStep Interview by clicking Skip
Interview on the EasyStep Interview Welcome screen. You will be prompted to enter some basic
company information and to save the company file.

➍ Follow the onscreen instructions and complete the interview.

Completing your company setup
After you’ve created your company file, you can begin using QuickBooks to run your business.
But before you do, we recommend that you review the information in this section to make sure
your company file is properly set up and that your data is complete.
This section describes some additional tasks you might need to do as you begin using
QuickBooks. Depending on how much information you entered during the EasyStep Interview,
some of these tasks might not apply to you.
Enter your company information
Do this task if you did not enter this information in the EasyStep Interview.
To enter the contact and legal information for your company, go to the Company menu and click
Company Information. To learn more about each of the fields and where the information you
enter will be used in QuickBooks, click the Help button.
Review your Chart of Accounts
If you used the EasyStep Interview, a chart of accounts based on your type of business was set up
for you. Review the chart of accounts to be sure it accurately reflects the accounts you need to run
your business. You can change account names and edit, delete, or add accounts as necessary. For
example, you will need to add any businessrelated bank, credit card, or loan accounts. To view
your Chart of Accounts, go to the Lists menu and click Chart of Accounts.
Numbering your accounts
Some businesses prefer to organize their accounts by number. Adding numbers can help you
identify the type of accounts, thereby speeding up your account selection on various forms. You

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might want to develop and follow a consistent account naming and numbering convention. For
example:
10000-19999 - Assets
20000-29999 - Liabilities
30000-39999 - Equity
40000-49999 - Income
50000-59999 - Cost of Goods Sold
60000-69999 - Expenses (or Operating Expenses)
70000-79999 - Other Income (not related to daily activity)
80000-89999 - Other Expenses (not related to daily activity)
If you want to use numbers to identify your accounts, you need to turn on this preference in
QuickBooks, as follows.

➊ Go to the Edit menu and click Preferences.

➋ In the Preferences window, click Accounting in the list on the left.

➌ Click Company Preferences.

➍ Select the Use account numbers checkbox.

➎ Click OK.

4.3 Creating your customer and vendor list

Create your customer, vendor, and items lists
To bill customers and pay your bills with QuickBooks, you must update your customer, vendor,
and item lists so that they accurately reflect your business. Instructions for setting up these lists
are provided in the adding vendors and customers section: You can choose to enter this
information all at once, or you can enter it as you work, using the Quick Add feature.
Enter historical transactions
If your start date is before today’s date, you’ll need to enter past transactions from the start date to
today. This ensures that your QuickBooks records are completely up-todate and your reports will
be accurate. Enter historical transactions in chronological order. For example, QuickBooks won’t
know how to credit a customer payment unless you’ve previously recorded the invoice to that
customer. The most efficient way to enter historical transactions is in the account register.
Note: Entering historical transactions is especially important if customers don’t pay you at the
time they receive goods or services. If you don’t enter historical transactions early on, it’s hard to
track and collect late customer payments. Intuit recommends that

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you enter your transactions in this order (verify with accountant):
• Invoices you’ve sent out since your start date
• Purchase orders you’ve issued since your start date that you haven’t received in full
• Cash or checks you’ve received since your start date
• Bills you’ve received since your start date
• Bills you’ve paid since your start date
• Deposits you’ve made to any of your accounts since your start date
• Any other checks you’ve written (for things other than bills) since your start date
• Employee year-to-date information paid from January 1 through your start date • Payroll liabilities
owed at the time of your start date (for manual payroll and tracking payroll transactions only)
Note: If you don’t have time to enter all your historical transactions right away, don’t worry. You
don’t need to enter all your past transactions before you start using QuickBooks for new
transactions. Enter new transactions as they occur. Then catch up with historical transactions when
you can. Remember, though, that your account balances will be incorrect (and your reports may be
wrong) until you enter all the past transactions.
Complete your bank account information
After you’ve entered your historical transactions, your account registers will contain entries
reflecting bills you’ve paid, checks and paychecks you’ve written, and deposits you’ve received.
To make your account registers complete, you must also enter these transactions:
• Checks or other charges that happened before your start date but didn’t appear on statements before
your start date (i.e., didn’t clear)
• Other checks you wrote after your start date that were not for bills or accounts payable (for
example, credit card payments) 24
• Deposits you made after your start date that were not customer deposits
• Deposits you made before your start date but that didn’t appear on statements before your start date
• Bank charges and fees
• Interest paid on your account
Refer to the in-product Help for step-by-step instructions on how to enter these transactions to make
your account registers accurate.
Backing up your company file
The QuickBooks backup file is a compressed version of your QuickBooks company file that
contains all transactions through the date the company backup was made. A backup file provides

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insurance against accidental data loss and can be used to restore your data. QuickBooks backups
have a .qbb extension and cannot be opened directly.
QuickBooks provides several backup options for securing your data:
• Standard backup
• Portable Company File
To use one of the backup options, go to the File menu and click Save Copy or Backup. To restore
your backup, go to the File menu and click Open or Restore Company. To learn more about
backing up your company file, refer to the in-product Help.
Quick books learning centre.
CHAPTER FIVE

MAIN QUICKBOOKS FEATURES

Learning Objectives

By the end of this chapter the learner shall be able to;

i The use the QuickBooks work area

ii Find data in QuickBooks centers

iii Use customer centre, vendor centre and employee centre

5.1 Getting Around QuickBooks

The QuickBooks work area, shown in Figure 2, is designed to enable you to complete tasks
quickly. QuickBooks provides several ways for you to work; choose the method that works best
for you

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Using the Home page to move around in QuickBooks
When you open a company file in QuickBooks, the Home page is displayed automatically. The
QuickBooks Home page provides a big picture of how all your essential business tasks fit
together. Tasks are organized into logical categories (Customers, Vendors, Employees, Company,
and Banking) with workflow arrows to help you learn how tasks relate to each other and to help
you decide what to do next.
Note: The workflow arrows indicate a logical progression of business tasks in QuickBooks.
However, these arrows do not restrict you from doing tasks in a different order, or an order that
works better for your business needs. To start a task, simply click the icon for the task you want to
do. For example, to create an invoice, click the Invoices icon. To return to the Home page, click
the Home button on the navigation bar. The Home page also provides a quick glance about the
state of your business. You can see your current account balances, updated automatically as you
do work in QuickBooks, in the Account Balances list. The Home page you see has been
customized to display only those tasks and features that you use, based on the questions you
answer in the EasyStep Interview. Functions you don’t need won’t clutter your workspace.
However, to add these functions later, you can turn them on in preferences. Go to the Edit menu
and click Preferences. Click the Desktop View option and then click the Company Preferences tab.
If you’re a new business owner or new to QuickBooks, the QuickBooks Coach will walk you
through the business flows you see on your Home page. The QuickBooks Coach uses spotlights
and tips to explain each step in your workflow. Turn coach tips on and then mouse over and click
the Coach icons ( ) to see tips and spotlights.

5.2 Finding your data in QuickBooks centers

QuickBooks includes Customer, Vendor, and Employee Centers where you can view and manage
all of your customer, vendor, and employee information and transactions. You can go to one of
the QuickBooks Centers by clicking the appropriate button in the navigation bar (on the left side
of the toolbar).

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Customer Center
The Customer Center, shown in Figure 3, is a lens into all your customer information. Without
having to sift through multiple screens, you can view a list of all your customers and see pertinent
information for each of them. Click on a customer’s name and you’ll immediately see all the
activity you’ve had with them as well as their pertinent contact information (phone number, fax
number, and payment terms). You can use the Customer Center to find out how much money a
specific customer owes you or to view a list of all your customers with open balances. You can
also look at all your customer transactions (estimates, sales orders, invoices, credit memos,
refunds, etc.) across all of your customer in the Transactions list rather than having to run separate
reports.

Vendor Center
The Vendor Center gives you a complete picture of where your money is going. From one screen,
you can see all your vendors and exactly what you owe them. Simply click a vendor’s name to
view your entire history with that vendor. You no longer need to run separate reports to see
exactly how much business you’re doing with each individual vendor. And, you can sort your
bills by due date so you can stay on top of your finances. If you need to talk to a vendor, click
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their name and you’ll see all their contact information. If a vendor calls you to follow up on a late
payment, you can quickly look up the bill and see when you paid it and what the check number
was.
Employee Center
From the Employee Center, you can see exactly what you’re paying each employee. Simply click
an employee’s name to view that person’s payroll history. And if you need to get in touch with an
employee, their contact information is right in front of you.
Payroll Center
If you subscribe to one of the QuickBooks Payroll services (additional fees apply), the Employee
Center includes a Payroll Center. Use the Payroll Center to manage your payroll and payroll
compliance.1 The Payroll Center is the hub for managing all payroll activities. The Payroll Center
reminds you of important payroll dates so you pay your employees, pay your payroll liabilities,
and file forms on time. To check out the Payroll Center, click the Employee Center icon on the
navigation bar and then click the Payroll tab.

5.3 Using in-product Help

QuickBooks in-product Help provides background information and instructions for doing
QuickBooks tasks. You can access the Help content and features in several ways. To use in-
product Help, go to the Help menu and click QuickBooks Help.

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Viewing Help for a window you have open
If you are unsure how to use a particular QuickBooks window, press the F1 key on your
keyboard. To get help. (You can also click the Help button in the window, if one is present.)
These Help topics provide answers to questions such as:
• What can I use this form for?
• What does this button do?
• What kind of information is displayed in this column?
• What happens when I select this option?
• How do I complete the task?

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 CHAPTER SIX

QUICKBOOKS BASICS

Learning Objectives

By the end of this chapter the learner shall be able to;

i. Work with QuickBooks lists

ii. Write checks and pay bills
iii. Add different types of accounts in QuickBooks such as the in
come and the expense

To take full advantage of QuickBooks, there are some important concepts you need to understand.

6.1 Working with QuickBooks lists

Lists are one of the important building blocks that make QuickBooks so powerful and efficient.
QuickBooks uses list information to fill out most QuickBooks forms. For example, to create an
invoice, you choose the customer name from your Customers & Jobs list. QuickBooks
automatically enters the customer information on the form for you. This saves you time and
prevents typing errors. You can also change the information directly on the form as needed. Lists
are easy to set up in QuickBooks, but do require careful planning. Depending on the type of list
you want to use, you can get to the list in one of two ways:
• QuickBooks Centers: Your Customers & Jobs, Vendors, and Employees lists are available in
the Customer, Vendor, and Employee Center, respectively. Click the appropriate QuickBooks
Center button on the navigation bar to go to a QuickBooks Center.
• List windows: Other lists, such as the Chart of Accounts and Item List, appear in separate
windows. To view one of these lists, click the Lists menu and then click the list you want. To
enter information in these lists, use the menu button at the bottom of the list to add, edit, or delete
list items. The menu also provides access to common features associated with the list.

The more detail you enter for each list item, the more information QuickBooks can use to pre-
populate forms, track financial data, and display useful reports about your business. Another
advantage of lists is that common tasks like adding list entries, editing list information, and
deleting list entries are performed the same way. Figure 4 illustrates how QuickBooks uses list
information across multiple windows and tasks to simplify data entry and to give you a complete
picture of how your business is doing.

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6.2 Writing checks versus paying bills
In QuickBooks, you can manage your bills and payments in two ways:
Write checks to pay bills now. Use the Write Checks window and assign the amounts to
appropriate expense accounts. This method is recommended when you don’t receive a bill, such
as when you go to the store and write a check and then you need to record that expense in
QuickBooks. You can also use Write Checks to pay a bill as soon as you receive it, as long as you
don’t need to track the bill.
Enter bills when you receive them and pay them later.
Use the Enter Bills window to enter bills when you receive them. Then use the Pay Bills window
to pay bills when they are due. You can set up QuickBooks to remind you to pay bills when they
are due. Using this method, you keep your money in your business for as long as possible. You
might still use a check to pay the bill, but this method enables you to track how much money you
owe. And at any time, you can run reports to analyze unpaid bills for information such as which
vendors you owe money.
Note: Do not simply write a check in the Write Checks window to pay bills that you entered in the
Enter Bills window or the accounts payable registers.

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6.3 QuickBooks Essential Tasks
Adding an Account
When you set up your company file, QuickBooks sets up certain accounts for you automatically.
However, as your business grows or changes, you might need to add new accounts to your chart
of accounts to better organize your finances. Or, you might need an account that was not provided
during setup. For example, you might want to create expense accounts to track office supply
purchases separately from advertising costs. To add an account:

➊ Go to the Lists menu and click Chart of Accounts.

➋ Click the Account button and then click New.

➌ In the Add New Account: Select Account Type window, select the type of account you want to
create and then click Continue.

➍ Enter the account’s name in the Account Name field. This name will appear on your company
financial statements.

➎ If you want to make this account a subaccount of another account, select the
Subaccount of checkbox. From the drop-down list, click the account that will be the higher-level
account for this subaccount.

➏ (Optional) Enter a short description, note, bank account number, or credit card number, depending
on the type of account you are adding.

➐ For income and expense accounts. From the Tax-Line Mapping drop-down list, click the
appropriate tax line or <Not tax-related>.

➑ For balance sheet accounts. Enter an opening balance based on the account’s balance as of your
QuickBooks start date. Generally, you should enter any balance sheet balances as of the day
before your start date. That way it’s all exactly correct at the opening of your start date. If you’re
putting money into the account with a transaction, do not use the opening balance field, since this
will create an additional transaction. If you’re not sure of the balance, you can leave the field
blank and enter the information later. Click OK when finished.

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➒ Click Save & Close or Save & New to add another account.

Why Use Subaccounts?

When you need more detail about what’s going on in an account, you can divide the account into
one or more subaccounts. Subaccounts let you track several related types of income or expenses
independently yet keep them all under the ―umbrella of a single parent account. Subaccounts
appear indented immediately below their parent account in your chart of accounts. If you create
subaccounts, it’s best not to post anything to the ―parent account For example, if your business
has substantial advertising expenses, you might decide to divide your Advertising expense
account into several subaccounts, such as Newspaper Ads, Signs, Yellow Pages Listing, and
Direct Mailings.

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What type of account should I use?
There are two main types of accounts in the QuickBooks chart of accounts:
• Income and expense accounts
• Balance sheet accounts
Income and Expense Accounts
Income and expense accounts track the sources of your income and the purpose of each expense.
When you record transactions in one of your balance sheet accounts, you usually assign the
amount of the transaction to one or more income or expense accounts. For example, not only do
you record that you took money out of your checking account, but you keep track of what you
spent the money on (utilities or office supplies).

Note: QuickBooks does not display balances for income and expense accounts in the Chart of
Accounts. To see these balances, go to the Reports menu, click Report Center, and then click the
Company & Financial category. You can also select the income or expense account in the chart of
accounts and click QuickReport.
Balance Sheet Accounts
QuickBooks provides 10 types of balance sheet accounts to choose from as you create and add to
your Chart of Accounts. Use the type of account that best describes the type of data you are
tracking.

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 6.4 Adding Customers Vendors and other accounts
Adding Customers
Customers are the lifeline of your business. By entering detailed information in QuickBooks
about the people and companies to whom you sell your products and services, you can personalize
their bills, send invoices easily, and quickly view the status of their accounts. You can add new
customers at any time.

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To add a customer:

➊ Click the Customer Center icon at the top of the QuickBooks window.

➋ Click New Customer & Job and then click New Customer.

➌ On the Address Info tab, enter all the data that you have about the customer, including their name,
Bill to and Ship to addresses, and additional contact information.

➍ Complete the Additional Info and Payment Info tabs, as appropriate.

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➎ If you want to add additional fields to the form, click Define Fields to customize the form.

➏ Click OK or Next (if you want to enter another customer).

Adding Vendors
QuickBooks uses the vendor list to hold information about the people and companies you buy
goods and services from to run your business; for example, this list could include the phone
company, your office supplies vendor, and your tax board. You can add new vendors at any time.

To add a vendor:
➊ Click the Vendor Center icon at the top of the QuickBooks window.

➋ Click New Vendor.

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➌ On the Address Info tab, enter all the data that you have about the vendor, including their name,
address, and additional contact information.

➍ If you owe this vendor money as of your company’s start date, enter the amount in the Opening
Balance field.

➎ Click the Additional Info tab and complete the form.

➏ If you want to add additional fields to the form, click Define Fields to customize the form.

➐ Click OK or Next (if you want to enter another vendor).

Adding Items
In QuickBooks, an item is anything that your company buys, sells, or resells to run your business.
Items are your products, services, and things such as shipping and handling charges, discounts,
and sales tax. When you choose an item from the Item list, QuickBooks fills in a description of
the line item and calculates its amount for you.
QuickBooks provides 12 different types of items, described in the table on page 58. Some items,
such as service or inventory part items, help you record the services and products your business
sells. Other items, such as the subtotal or discount item, are used to perform calculations on the
amounts in a sale.

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To add an item:

➊ Go to the Lists menu and click Item List.

➋ Click Item at the bottom of the list and then click New.

➌ Click the Type drop-down arrow and choose the type of item you want to create (see table on page
58).

➍ Enter an item name as you want it to appear on purchase and sales forms. ➎ Enter the
description that you want to appear on sales forms when you use the payment item.

➏ In the Rate field, enter the amount you want to charge for the item or leave as zero, if the rate
varies.

➐ In the Account field, choose the account that is associated with this item. (In most cases, you will
assign the item to an income account.)

➑ In the Tax Code list, select the appropriate sales tax code or create a new one. If you do not see
the Tax Code list, you must turn the tax preference on in the Sales Tax area under Edit |
Preferences.

➒ Click OK or Next (if you want to enter another item). QuickBooks provides 12 different types of
items to help you fill out sales and purchase forms quickly.

Which Item Type Should I Choose?

QuickBooks provides 12 different types of items to help you fill out sales and purchase forms quickly.

33
Why item types are important
Although you can use items as a quick means of entering data, items fulfill a much more
important QuickBooks role: to handle the behind-the-scenes accounting. When you create an
item, you link it to an account; when the item is used on a form, it posts an entry to that account
and another entry to the appropriate accounts receivable, accounts payable, checking, fixed asset,
or other account. While items are easy to set up, you should spend some time deciding how they
can best work for you before you start setting them up and using them. Use your current list of
services and products as a starting point. Consider how much detail you want on your invoices or
statements and set up your items with that level of detail in mind. For example, if you are a
seamstress who creates and sells home accessories, you can set up a single item and charge a flat
rate for a certain size of couch pillow, or you can break that pillow down further into labor and
materials. Furthermore, QuickBooks provides many useful reports that break information down
by the goods or services you purchase and sell. That way, you can quickly find out:
• How much income your items bring in

34
 • What you are spending to purchase items
• How well you estimate the cost of items
• How much time you spent on each type of job or item

6.5 Setting up sales tax

Setting Up Your Business | Setting up Sales Tax
Depending on where you do business, you might be required to collect sales tax for the products or
services you sell. If you collect sales tax, you must pay it to a tax agency on a regular schedule.
QuickBooks helps automate your sales tax tracking so you can keep accurate records about the
sales tax you collect and pay.
Important: You must follow the rules and regulations for collecting and paying sales tax in your tax
district (city, county, state).
Understanding how sales tax works
QuickBooks uses sales tax codes to track the taxable or non-taxable status of both the items you
sell (products and services) and your customers. If your tax agency requires you to report the
reasons why particular sales are taxable or non-taxable, the sales tax codes that you assign to your
items and customers enable you to run reports that provide this information for your sales tax
return. QuickBooks uses sales tax items to calculate and add sales tax charges when you make a
taxable sale. When you set up a sales tax item, you assign a sales tax rate to it and associate it
with the tax agency to which you pay the sales tax. All of the sales tax items you set up are in
your Item list. Once you’ve set up sales tax, QuickBooks automatically applies the appropriate
sales tax rate to the sale of your taxable items.
Before you start setting up sales tax
To set up sales tax in QuickBooks, you need to know the following sales tax requirements for the
locations where you sell your products and services:
• Sales tax rates for each tax district (a city, county, or state that has a sales tax) in which you sell.
You may have multiple sales tax rates that you need to charge, for example, sales tax for both a county
and a state.
• Tax agencies to which you pay the collected sales tax for each of those district taxes.

35
Setting up sales tax
Setting up sales tax is a multi-step process, divided into three main parts:
• Part 1: Sales tax payment schedule
• Part 2: Sales tax codes to track taxable status of items and customers
• Part 3: Sales tax items, rates, and tax agencies

36
Part 1: Sales tax payment schedule
In this procedure, you’ll turn on sales tax and then set up information about when you need to pay your
tax agency. To set up your sales tax payment schedule:

➊ Go to the Edit menu and click Preferences.

➋ Click Sales Tax in the list on the left.

➌ Click the Company Preferences tab.

➍ For the question Do You Charge Sales Tax?, click Yes.

➎ Select when you owe sales tax to the tax agency, as specified by your tax agency.
• Select As of invoice date if your tax agency stipulates that you owe sales tax from the moment you
write an invoice or make a sale.
• Select Upon receipt of payment if your tax agency stipulates that you owe sales tax when you
receive the payment from a customer.
Note: This preference overrides the accounting basis you’ve set for your company and for your report
preferences (i.e., if your report preference is set to ―cash‖ but you select ―accrual‖ here, your sales
tax reports will be accrual-based).

➏ Select how often you pay sales tax to the tax agency, as specified by your tax agency. If you
don’t know which time period to choose, check your sales tax license. It should indicate the
payment schedule that you need to use.

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6.6 Setting up your Payroll
As an employer, you have specific payroll responsibilities that are required by government
agencies. These agencies can be federal, state, or local. Some of these responsibilities include, but
are not limited to, withholding amounts from your employees’ compensation to cover income tax,
social security, Medicare, and other payments.
Choosing a payroll service
To use QuickBooks to manage your payroll, you first need to subscribe to a QuickBooks payroll
service. QuickBooks’ flexible options ensure that you get the payroll service that is right for you.
QuickBooks also includes manual payroll features that do not require a subscription. Refer to the
in-product Help for more information about using manual payroll in QuickBooks. Consult with a
tax professional or accountant to address all of your business’ specific needs. You can learn about
all of the QuickBooks payroll offerings, including manual payroll through the QuickBooks
Payroll Web site. To learn about and sign up for a Payroll Service:

➊ Go to the Employees menu and click Payroll.

➋ Click Learn About Payroll Options. Or, if you are not sure which payroll service is right for
you, contact one of our payroll experts at 1-866-820-6382 to learn more and help you choose.
Note: If you choose to sign up for a payroll service, you will be prompted to complete the
activation process for your service. After you complete your activation, you can set up payroll for
your business as described in the next section.
Setting up payroll
QuickBooks Payroll includes an easy-to-use Payroll Setup wizard that guides you through setting
up payroll for your business. Payroll Setup helps you set up your employees, set up compensation
and benefit information, as well as enter any year-todate payroll data. You will also be assisted in
setting up scheduled payroll groups and your payroll liability payment schedule to make
managing your payroll easier.
Setting up Employees
To process paychecks and prepare tax documents for your employees, you need to enter specific
information about each of your employees in QuickBooks.

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Note: If you are a QuickBooks Payroll subscriber, you will be prompted to add all of your
employee information during payroll setup (described on page 69). Use the following procedure to
edit employee information or to add additional employees at a later date. Refer to the Payroll
Setup Checklist on page 71 for a list of employee information to gather. To set up an employee’s
personal information:

➊ Click the Employee Center icon at the top of the QuickBooks window.

➋ Click New Employee.

➌ On the Personal tab, fill in the form.

➍ Click the Address and Contact tab, fill in the form, and then click OK.

➎ When prompted to set up the employee’s payroll information, click Leave As Is. To set up an
employee’s payroll information:

➊ Click the Employee Center icon at the top of the QuickBooks window.

➋ Click the Employees tab and then double-click the employee’s name.

➌ From the Change tabs drop-down list, click Payroll and Compensation Info.

➍ Fill in the Payroll Info form.

➎ Click the Taxes button.

➏ Click the Federal tab and fill in the form, based on the employee’s W-4 information.

➐ Click the State tab and fill in the form.

➑ Click OK.
Once you’ve set up your employees, refer to ―Paying Employees‖ to learn about paying them.

CHAPTER SEVEN

QUICKBOOKS OPERATING FEATURES

Learning Objectives

By the end of this chapter the learner shall be able to;

i. Create an Estimate in QuickBooks

ii. Create an Invoice
iii. Enter sales receipts and receive a payment in QuickBooks software and receive money from
a customer by making a deposit
iv. Pay a bill and write checks

39
 v. Prepare different reports such as trial balance, Trading profit and loss account and
balance sheet

7.1 Creating an Estimate

You can use the estimate form to prepare estimates, bids, quotes, or proposals for your customers.
You can change the title ―Estimate‖ to anything that suits your business. Filling in the estimate is
similar to creating an invoice. And when it’s time to bill your customer, you can create the
invoice directly from the estimate by clicking Create Invoice on the estimate’s toolbar.
QuickBooks then creates the invoice, with all the information from the estimate filled in. Later,
you can create reports that compare your estimated costs and revenue against your actual costs
and revenue to see how accurate your estimates are. To create an estimate:

➊ If necessary, turn on Estimates (described below), if you didn’t do this during the
EasyStep Interview.

➋ Go to the Customers menu and click Create Estimates.

➌ Enter the name of the customer or job.

➍ Select an estimate template from the Template dropdown list.

➎ Fill in the estimate form.

➏ Click Print.
❼ Save the estimate.
To turn on the estimates feature:
➊ Go to the Edit menu and click Preferences.

➋ Click Jobs & Estimates in the list on the left and then click the Company Preferences tab.

➌ Click Yes to the question, ―Do You Create Estimates?‖

➍ To have QuickBooks warn you when you try to record an estimate with the same number as the
existing estimate, select the Warn about duplicate estimates numbers checkbox.

➎ If you do progress invoicing:

• Make sure Yes is selected in response to the question, ―Do You Do Progress Invoicing?‖
• Specify whether you want line items that have zero amounts to print on your progress invoice

➏ Click OK.

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7.2 Creating an Invoice

When your customers don’t pay you in full at the time you provide your service or product, or when
they pay in advance, you need to track how much they owe you. You can use an invoice to help you
keep track of what your customers owe you (or your ―accounts receivable‖). Invoices list all the
details about the sale, including the services you’re providing or the products you’re selling (your
―items‖). Invoices also show the quantity and price or rate of each item. If you need to make
automatic adjustments to prices (for example, discounts or markups), invoices will work for you.
Note: If your customers pay in full at the time of purchase, do not create an invoice.
Instead, create a sales receipt, described on page 79.
To create an invoice:

➊ Go to the Customers menu and click Create Invoices.

➋ In the Customer:Job drop-down list, enter a name or click the name of the customer or job.

➌ Click the Template drop-down arrow and then click the invoice template you want to use.

➍ Click the Terms drop-down arrow and then click the sales terms that apply to this customer.

➎ In the lower part of the form, enter each of the items (including the proper quantity) that the
customer has purchased.

➏ Click Print on the toolbar to print the invoice now. Optionally, you can select the To be printed
checkbox to print the form later or the To be e-mailed checkbox to e-mail the form later.

➐ Save the invoice.

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7.3 Entering sales receipts
When your customers pay in full at the time they receive your service or product, you don’t need
to track how much they owe you. However, you might want to record the sale, calculate its sales
tax, or print a receipt for the sale. In these cases, you can create a sales receipt. Examples of
businesses that commonly use sales receipts include beauty salons, pet groomers, dry cleaners,
and restaurants.
Note: If you need to track how much a customer owes you or you do not receive full payment at the
time of the transaction, do not use a sales receipt.
To enter a sales receipt:

➊ Go to the Customers menu and click Enter Sales Receipts.

➋ Fill in the top part of the form, including the Customer:Job, Date, and Payment
42
Method.

➌ Click the Template drop-down arrow and then click the sales receipt template you want to use.

➍ In the bottom part of the form, select or enter the items purchased.

➎ Save the transaction.

7.4 Receiving a Payment

When you receive money from a customer, you must receive the payment in QuickBooks so
QuickBooks can record the transaction and mark the invoice as being paid. When you receive a
payment, the accounts receivable records are updated, and the payment is ready to be deposited into an
account. To receive a payment:

➊ Go to the Customers menu and click Receive Payments.

➋ Fill in the top portion of the form, including the customer’s name, the payment amount, payment
method, and the date on which the payment was received.

➌ Check the column to the left of the invoice to which you want to apply the payment.
You might be asked to decide how to apply the payment for one of the following scenarios:
• Overpayment can become a credit or refund
• Underpayment can be left as is or written off
• Customer has unused credit to be applied
• Customer has available discounts

➍ Choose the appropriate selection and you should see your choices reflected in total amounts for
selected invoices. If the customer has a discount or available credits, you can choose how to apply
them.
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➎ Save the payment.

7.5 Making a Deposit

When you receive a payment from a customer, you can either deposit the payment into a bank
account immediately, or you can wait until a later time to make the deposit.
To make a deposit:
➊ Go to the Banking menu and click Make Deposits.

➋ In the Payments to Deposit window, select the payments that you want to deposit and click OK.

➌ In the Make Deposits window, click the Deposit To drop-down arrow and then click the account to
which you want to deposit the funds.

➍ Verify the date and the list of payments to deposit, making updates as necessary. ➎ If you
want to receive cash back from this deposit, fill in the Cash Back fields at the bottom of the
form.

➏ If you want to print a deposit slip or deposit summary, click Print.

➐ Save the deposit.

Note: Just because you’ve recorded the deposit in QuickBooks doesn’t mean that you’ve actually
made the deposit and that the money is available. You still need to physically deposit the money at
the bank or send an online transfer.

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7.6 Paying Bills
As you purchase equipment, supplies, products, or services to run your business, you will also
receive bills that need to be paid. Entering these bills in QuickBooks enables you to not only track
information about your purchases, but also to pay these bills. QuickBooks remembers all of your
unpaid bills, enabling you to easily choose the bills you want to pay. QuickBooks then writes and
saves the checks or credit card charges or sends the online banking payment instructions,
depending on the payment method you choose.
Note: Before paying a bill, be sure you read the section ―Writing checks versus paying bills‖ on page
41 to make sure you are using the correct payment method.
To enter a bill:

➊ Go to the Vendors menu and click Enter Bills.

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➋ In the Vendor field, choose or enter a new vendor.
Note: If an open purchase order exists for this vendor, you are prompted to receive against it.
Click Yes to receive against one or more purchase orders; then, in the Open Purchase Orders
window, click each purchase order that contains items you’ve received and are being billed for.

➌ Specify the Payment Method, Payment Account, and Payment Date.

➍ In the Amount Due field, enter the amount of the bill.

➎ Fill in the Date, Ref. No., Terms, and Memo fields as necessary.

➏ For expenses (money you spend to run your business, such as utilities), assign the bill to one or
more expense accounts on the Expenses tab. For items (products or services your business buys),
edit items that were entered from your purchase order or enter new items on the Items tab.

➐ Click Save & Close or Save & New to enter the transaction. To pay a bill:

➊ Go to the Vendors menu and click Pay Bills.

➋ All outstanding bills are displayed. To limit the number of bills displayed, click Due on or before
and then click the due date for the bills you want to display.

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➌ Click Pay Selected Bills to complete the transaction.

7.7 Writing Checks

You can write a check for any kind of expense that you track with QuickBooks expense accounts
and for noninventory part, service, and other charge items. If you are using inventory or purchase
orders (Premier only), you can write checks for inventory part items too.
Note: Before writing a check, be sure you read the section ―Writing checks versus paying bills‖ on
page 41 to make sure you are using the correct payment method.
To write a check:

➊ Go to the Banking menu and click Write Checks.

➋ Click the Bank Account drop-down arrow and then click the account from which you want to write
the check.

➌ Fill in the onscreen check as you would a paper check.

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➍ Itemize your expenses (shipping charges, taxes, or other expenses not associated with any one item)
on the Expenses tab.

➎ If you are purchasing items for your inventory, enter the items on the Items tab.

➏ Save the transaction.

To find and print a single check:

➊ Load the blank check form into the printer.

➋ Go to the Banking menu and click Write Checks.

➌ Click the Find button and search for the check you want to print.

➍ Double-click to view the check you want to print.

➎ Click Print.

➏ In the Print Checks window, choose the options you want and click Print.
Note: To learn how to print multiple checks at the same time, refer to the in-product Help.

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7.8 Issuing Credits or Refunds
Use a credit memo to record a credit when a customer returns items and you’ve already recorded
an invoice, customer payment, or sales receipt. You can also use a credit memo for an
overpayment. To enter a credit memo or record a return:

➊ Go to the Customers menu and click Create Credit Memos/Refunds.

➋ In the Customer:Job field, click the customer and job for which you are creating the credit
memo or refund check.
Note: If you have created more than one job for the customer, be sure to assign the credit memo
to the correct job. You can apply the credit memo only to the same job for which it was created.

➌ Click the Template drop-down arrow and then click a template.

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➍ Enter the items being returned in the line item area.

➎ Describe the reason for the credit and enter the quality and rate, if applicable.
➏ (Optional) Enter a memo for this transaction.
Note: The memo does not print on the credit memo, but it does appear in the Accounts
Receivable register and in the customer register.

➐ Indicate whether you want to print or e-mail the credit memo to the customer. (You can choose
to do both.)

➑ Save the credit memo.

➒ In the Available Credit window, choose how to use the credit. You can:
• Retain as an available credit
• Give a refund
• Apply it to an invoice
Note: QuickBooks enters a negative amount in your Accounts Receivable register for the credit
memo.

7.9 Paying Employees

Paying employees is a big responsibility. You have to keep track of hours, salaries and wages,
Social Security numbers and dependents, tax rates and forms, vacation and sick time, bonuses and
advances, as well as company payments to government and private pension plans. QuickBooks
provides several features and services to help you manage your own payroll quickly and easily.
Note: For information about your payroll options in QuickBooks, go to the Employees menu,
click Payroll Service Options, and then click Learn About Payroll Options.
To print paychecks:

50
➊ Go to the Employees menu, click Pay Employees, and then specify if you want to pay
employees using Unscheduled Payroll (generally used to pay bonuses and off-cycle checks) or set
up Payroll Schedules.

➋ Update the Pay Period Ends date and the Check Date values, as needed.

➌ Click the Bank Account drop-down arrow to choose the account that QuickBooks uses to
record this transaction.

➍ Select the employees you want to pay by clicking in the column to the left of the employee’s
name.

➎ Review the paycheck information in the Enter Payroll information window.

➏ To preview or modify a paycheck, click the employee’s name to open the Preview
Paycheck window. Make any necessary changes and click Done.

➐ Click Continue.

➑ Review and verify the paycheck information in the Review and Create Paychecks window.

➒ In the Paycheck Options section, click whether the paychecks should be printed or
handwritten.
❿ Click Create Paychecks.
⓫ In the Confirmation and Next Steps window that appears, click Print Paychecks. Click Send
Payroll to Intuit if you’re sending your payroll to Intuit for processing.

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7.10 Using Reports
One of QuickBooks’ most robust features is its ability to generate data-rich reports about your
business. Everything you enter in QuickBooks can be found and generated into a report.
QuickBooks comes with dozens of prepared reports that you can run. You can use the Report
Center to learn about QuickBooks reports and locate the ones that contain the information you
need. Once you’ve found a report, you can change its date range, customize the way it looks,
print a copy of it, export it to Microsoft Excel, or display it on your screen.
To find and display the right report:

➊ Click the Report Center icon at the top of the QuickBooks window.

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➋ Click a report category from the list on the left. Reports for the selected category are displayed
on the right.

➌ From the report list, you can view a thumbnail picture of the report by moving your mouse
over the thumbnail icon . To learn more about a specific report, click the More... link to learn
about the data and specific ways to customize the report.

➍ When you find the report you need, click its name to view the report.

How to Use Reports to Find the Information You Want

The QuickBooks Report Center describes all the available reports. Here are 10 common questions
that people ask and the QuickBooks report you can use to find the answer.

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