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Kenya Institute of Development Studies (K.I.D.S.)

Training and Consulting

QUICKBOOKS ACCONTING THEORY

 DEFINITIONS

Definition of financial applications

Financial applications are software programs that are used to manage and
track financial information.

They can be used for personal or business purposes, and can help users to
track their income, expenses, investments, and other financial data.
Advantages of financial applications

1. Convenience: Financial applications can be accessed from

anywhere with an internet connection, which makes it easy to track
your finances on the go.
2. Ease of use: Most financial applications are designed to be easy to
use, even for people who are not familiar with financial software.
3. Affordability: Financial applications are typically very affordable,
and many of them are even free to use.
4. Security: Financial applications are typically very secure, and they
use encryption to protect your data.
5. Customization: Many financial applications allow you to customize
the features and settings to meet your individual needs.

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 Types of financial applications

1Payment gateways-PayPal

2.Budgeting apps-Mint

3Finacial forecasting apps-Sage Inaact.

4.Bookkeeping software-Quickbooks,Xero

5.Online Banking apps-KCB mobile banking app

6.Tax management software-TurboTax,TaxAct

7.Peer-to- Peer(P2P) lending and investment software-

lendingclub,Prosper

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Features of Financial Applications
 .Some of the most common features of financial applications include:
 Accounting: Financial applications can be used to track income and
expenses, create budgets, and manage investments.
 Investing: Financial applications can be used to track investments,
research stocks and bonds, and make investment decisions.
 Budgeting: Financial applications can be used to create and track
budgets, help users save money, and reach their financial goals.
 Tax preparation: Financial applications can be used to import tax
information from bank accounts and credit cards, and help users file
their taxes.
 Personal finance: Financial applications can be used to manage a variety
of financial tasks, such as tracking income and expenses, budgeting, and
investing.

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Fundamentals of Accounting
 Accounting principles: Accounting principles are the rules and
guidelines that accountants follow when recording and reporting
financial information.
 Accounting records: Accounting records are the documents that
accountants use to record financial transactions.
 Accounting journals: Accounting journals are the books where
accountants record financial transactions.
 Accounting ledgers: Accounting ledgers are the books where
accountants post financial transactions from the journals.
 Accounting statements: Accounting statements are the reports
that accountants prepare to communicate financial information to
external and internal users.

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ACCOUNTING CONCEPTS
 Assets: Assets are things that a business owns that have a
monetary value.
 Liabilities: Liabilities are debts that a business owes to creditors.
 Owner's equity: Owner's equity is the difference between a
business's assets and its liabilities.
 Income: Income is the money that a business earns from its
operations.
 Expenses: Expenses are the costs that a business incurs in order
to generate income.

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 CONTINUATION
 Profit: Profit is the difference between a business's income and
its expenses.
 Loss: Loss is the opposite of profit. It occurs when a business's
expenses are greater than its income.


 Accounting Equation:
 Assets = Liabilities + Owner's Equity

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Accounting and Bookkeeping
 Bookkeeping is the process of recording and summarizing
financial transactions. Bookkeepers use a variety of tools and
techniques to track the flow of money in and out of a business.
They may use manual or computerized systems to record
transactions, and they may also prepare reports and summaries of
financial data.
 Accounting is the process of analyzing and interpreting financial
information. Accountants use the data recorded by bookkeepers to
prepare financial statements, such as the balance sheet, income
statement, and statement of cash flows. They also use financial
information to help businesses make decisions about things like
budgeting, investing, and financing.

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Comparison of Accounting and Bookkeeping
Accounting Bookkeeping
 The process of analyzing and  The process of recording and
interpreting financial summarizing financial
information transactions
 Prepares financial statements,  Uses a variety of tools and
such as the balance sheet, techniques to track the flow
income statement, and of money in and out of a
statement of cash flows business
 Uses financial information to  May use manual or
help businesses make decisions computerized systems to
about things like budgeting, record transactions
investing, and financing

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QUICKBOOKS PRACTICAL
Launching The QuickBooks Desktop Software
 On the windows search bar, type QuickBooks Pro and click on it to open.
A interface box pop up that enables you to see the existing company files.

Click on the option icon “Create new company file”

 Click on “Express Start ” icon.

An interface pops that enables to give your company information.

Guide: "Type of industry”(One is required to search for the industry that

matches your company).
Guide: "Business Type”-Types of businesses in QuickBooks include:

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CONT….
Sole proprietorship-is a type of business structure where a single individual
owns and operates the business.
Partnership or LLP-is a type of business owned by two or more partners.

Single-Member LLC(Form)-is a business structure where the company is

owned and operated by a single individual.(freelancing business).
Multi-Member LLC-is a business structure where the company is owned
and operated by two or more individuals or entities(Real Estate
Investments).
Corporation-is a legal entity that is separate from its owners, known as
shareholders(Microsoft Corporation)
S-Corporation-is a type of corporation that elects to be taxed under
Subchapter S of the Internal Revenue Code

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CONT….
 Non-profit-is an entity that operates for purposes other than making a profit(Red cross).
 Other/None-business does not fall into any specific pre-defined business type.
 The fields with (*) sign are a must fill.
 Update the country , city , address etc
 On the bottom of the interface click on “Preview your setting”
 Click on “company file location” icon to check your company file location.
 Click “ok.
 Click on “Create company” icon and give the application time to create your company.

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CHANGING THE VIEW OF THE ICON BAR

 After the company file is created, click on the “Start working” icon and
close the ads that pop up.

 On the menu bar, click on the “view” icon and click the “top icon bar”
option to change the view of the icon to be in the top position.

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ACTIVATING THE ITEMS AND INVENTORY ICON
 On the home interface under the company area, one needs to update the “items and inventory” icon to
facilitate tracking of quantities ,recording purchases, sales and adjust inventory levels.

 On the main menu, click on “Edit” icon

 Click on “Preferences” icon
 Click on the “Items & inventory” icon when the interface box pops up.
 On the right ,click on “ company preferences” option icon.
 Tick on the option “Inventory and purchase orders are active”
 Click ok
 The interface will close and later you will click on the home icon.

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SETTING THE SECURITY PASSCODE OF THE COMPANY

 On the main menu, click on “company”

 Click on “Change your password” on the dropdown menu

 Now setup the username, and other security credentials.

 Click “ok”.

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SETTING THE CURRENCY
 On the home menu, click on the “Edit” icon
 Click on “Preferences” and an interface will pop up.
 On the left section, click on “multiple currencies” icon
 On the right section, click on the “company preferences” icon
 Tick on the option “Yes, use more than one currency”.
 An interface box pops up. Click yes to turn on the multiple currencies option.
 On the bottom section, select the “view more currencies” option and select the KES(Kenya Shilling).
 Click on “make it active” and click on “yes” on the next interface.
 Click “ok”. The company file will close the settings will be updated.

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 ACCOUNTS
 An Account is a detailed record of all the money that a business or a person receives and spends .
 In a double entry system every credit or debit in the account is also represented.
 Account is found at Charts of Accounts in QuickBooks and the Charts of Accounts is generated automatically.
 Chart of accounts include the following accounts;
 Income

 Expense

 Asset

 Liability

 Equity

 Bank

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ACCOUNT CREATION
 In the company section, click on the “Charts of accounts” icon.
 On the bottom left section, click on the “Account” icon and click on “New”.
 Click on the Account option on the interface that pops up.e.g Bank,asset
 Click on “continue” option.
 Provide the Account information as required by company.
 If its one account, click on “Save & Close” option.
 If its more than one account, click on “Save & New” option to update information about the second account.
 NB: The “Opening Balance” icon allows us to update the balance and date of a particular account.
 Click “Home” to go back to the home interface.

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 VENDORS(SUPPLIERS)
 A vendor( Supplier/creditor) is person or company offering something for sale
 The Vendor section consists of the following as will be discussed in class;
 Purchase orders

 Receive inventory

 Enter Bills against inventory

 Enter Bills

 Pay Bills

 Manage sale Tax

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CREATION OF VENDORS(SUPPLIERS)
 On the home interface, click on the vendor icon and interface will pop up.
 On the top left section, click on “New Vendor” icon and click “add vendor”.
 Update the vendor information and click “ok”.
 NB: Take note of the “opening balance” and “date”

 Repeat the same processes for updating other vendors.

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 CUSTOMERS(DEBTORS)
 A Customer (Debtors) is a person or a company who buys goods or services from a shop or a business.

 The Customer Section consists of the following as will be discussed in class;’

 Sales order

 Estimates

 Invoices

 Receive payments

 Statements

 Statement charges

 Refunds and Credits

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CREATION OF CUSTOMERS(DEBTORS)
 On the home interface, click on the customer icon and interface will pop up.

 On the top left section, click on “New Customer & Job” icon and click “add customer”.

 Update the customer information and click “ok”.

 NB: Take note of the “opening balance” and “date”

 Repeat the same processes for updating other customers.

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 (EMPLOYEES)
An Employee is a person employed for wages or salary .

This sections contains the following;

 Employee center

 Enter Time

 My Payroll service

 Billing Rate Level List

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CREATION OF(EMPLOYEES)
 Under the employees section in the menu tab, click on “Employee center.”

 On the top left section, click on “New Employee” icon.

 A interface pops up where you can update the employee information.

 Click “ok” on the bottom section when done.

 Repeat the above steps to update other employee’s information

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 UPDATING ITEMS & SERVICES
 On the company section click on, click on “Items& Services”.

 On the bottom left section, click on “item” and click on “New”.

 Click on the “services”

 Click on “inventory assembly”

 Update the item/service information depending your business.(Item name,Description,cost price and selling price,
income account, date

 Click Ok

 Repeat the same processes to update other items.

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CREATING THE SALES RECEIPT
 When a customer buys something on cash, a sales receipt is implemented.

 On the customer on the home page, click on “Create sales receipt”.

 On the top left section, select the customer on the “customer job” icon.
 Update the mode of payment(cash, check etc.)
 Update the date, item name,description,quantity of the item.
 Update the customer message and if possible write a memo.
 Click “save & close” to update for one customer.
 Click “save & new” to update for another customer.
 NB:On top the interface we have a module for printing sales receipt

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CREATING THE INVOICE
 When a customer buys something on credit, an invoice is implemented.

 On the customer section on the home page, click on “Create invoices”.

 On the top left section, select the customer on the “customer job” icon.

 Update the date, item name,description,quantity of the item.

 Update the customer message and if possible write a memo.

 Click “save & close” to update for one customer.

 Click “save & new” to update for another customer.

 NB:On top the interface we have a module for printing invoice .

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TERMS TO NOTE ON THE INVOICE
 P.O Number(Purchase Order Number)-it refers to the number to a unique identifier
associated with a specific purchase order issued by the buyer to the seller
 TERMS-refers to the agreed –upon payment conditions and terms between the
seller(the entity or person issuing the invoice) and the buyer
 REP-typically stands for Representative or Sales representative.(Specific sales person).
 SHIP-It provides the details about the delivery method .
 VIA-It means “by way of” or “through". It indicates the specific carrier, shipping method or
transportation mode.
 F.O.B-It stands for “Free on Board". It is a shipping term that indicates the point at which
ownership and responsibility for the goods being transported from the seller to the buyer.


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DEPOSITING MONEY INTO THE BANK

 Under the banking section, click on the “Record Deposit” icon.

 An interface pops that will allow you to record your deposits.

 Tick on the deposit transaction required.

 Click “ok”

 Click on “Save & close”

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CUSTOMER PAYMENT

 On the home page, click on “Receive payment” from the create invoices path.

 The customer payment interface tab pops up

 Click on “Received from” icon to select the customer

 Update the mode of payment,date,amount paid and if possible provide a memo

indicating partial or full payment.

 Click on “save & close” icon if you are dealing with one customer

 Click on “save & new” icon if you are dealing with more than one customer.

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ENTERING BILLS

 On the home page, under the Vendor section, click on “Enter bills’

 An interface pops up.

 Update the vendor name,date,terms(if any),amount, account name from

where the money will be deducted from.

 click on “Save & close” to update one bill.

 click on “ Save& new’ to update more than one bill from different
vendors.

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PAYING BILLS

 On the home page, under the Vendor section, click on “Pay bills’

 An interface pops ups for bill payment.

 Tick on the bill(s) you want to pay

 Click on “pay selected bills”

 Click on “done”

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REPORTS
 This involves generation of financial reports like Adjusted trial balance,
Balance sheet, General Ledger & Profit Loss report

 Adjusted trial balance is a financial statement that lists all the general
ledger accounts of a company after adjusting entries have been made at
the end of an accounting period.

 Balance sheet is a financial statement that provides a snapshot of a

company's financial position at a specific point in time. It presents a
summary of the company's assets, liabilities, and shareholders' equity.

 General ledger is a comprehensive record that contains the details of each

financial transaction and helps in the preparation of financial statements.

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CONT….
 Profit loss statement also known as an income statement or statement of
earnings, is a financial statement that summarizes the revenues, expenses,
and resulting net profit or loss of a company over a specific period. It
provides a snapshot of a company's profitability during that time frame.
 Journal Entries statement is a recording of a financial transaction in the
accounting system. It documents the specific details of the transaction,
including the accounts involved, the amounts debited or credited, and a
brief description of the transaction

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GENERATING REPORTS

 Click on Reports menu

 Choose “Memorized Reports” tab, Select type of report from e.g

Accountant, Bank etc

 Select the specific report you want to generate e.g (Balance sheet, Cash
flow statements)

 NB:Modify the date depending on the time period you want.

 On top of the report is a module for printing and Sending the Report via
email as pdf or excel.

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CREATING COMPANY BACKUP FILE
 On the home page, Click File tab, select “Create Backup”
 Select “local backup”
 Select the area where you want to backup where your data when the
backup location selection box appears.
 Click ok.
 Click on “save it now”.

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