QuickBooks 2021 All–in–One For Dummies

Introduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 3 Beyond the Book 4 Where to Go from Here 4 Book 1: An Accounting Primer 7 Chapter 1: Principles of Accounting 9 The Purpose of Accounting 10 The big picture 10 Managers, investors, and entrepreneurs 10 External creditors 11 Government agencies 11 Business form generation 12 Reviewing the Common Financial Statements 12 The income statement 13 Balance sheet 16 Statement of cash flows 19 Other accounting statements 22 Putting it all together 23 The Philosophy of Accounting 25 Revenue principle 25 Expense principle 26 Matching principle 26 Cost principle 26 Objectivity principle 27 Continuity assumption 27 Unit-of-measure assumption 27 Separate-entity assumption 28 A Few Words about Tax Accounting 28 Chapter 2: Double-Entry Bookkeeping 29 The Fiddle-Faddle Method of Accounting 30 How Double-Entry Bookkeeping Works 33 The accounting model 33 Talking mechanics 35 Almost a Real-Life Example 38 Recording rent expense 39 Recording wages expense 39 Recording supplies expense 40 Recording sales revenue 40 Recording cost of goods sold 41 Recording the payoff of accounts payable 41 Recording the payoff of a loan 42 Calculating account balance 42 Using T-account analysis results 44 A Few Words about How QuickBooks Works 46 Chapter 3: Special Accounting Problems 49 Working with Accounts Receivable 50 Recording a sale 50 Recording a payment 50 Estimating bad-debt expense 51 Removing uncollectible accounts receivable 52 Recording Accounts Payable Transactions 53 Recording a bill 54 Paying a bill 54 Taking some other accounts payable pointers 55 Inventory Accounting 56 Dealing with obsolete inventory 56 Disposing of obsolete inventory 57 Dealing with inventory shrinkage 58 Accounting for Fixed Assets 60 Purchasing a fixed asset 60 Dealing with depreciation 60 Disposing of a fixed asset 61 Recognizing Liabilities 63 Borrowing money 64 Making a loan payment 64 Accruing liabilities 65 Closing Out Revenue and Expense Accounts 68 The traditional close 68 The QuickBooks close 70 One More Thing 71 Book 2: Getting Ready To Use QuickBooks 73 Chapter 1: Setting Up QuickBooks 75 Planning Your New QuickBooks System 75 What accounting does 75 What accounting systems do 76 What QuickBooks does 76 And now for the bad news 77 Installing QuickBooks 78 Dealing with the Presetup Jitters 79 Preparing for setup 79 Seeing what happens during setup 80 Running the QuickBooks Setup Wizard 81 Getting the big welcome 81 Supplying company information 82 Customizing QuickBooks 83 Setting your start date 84 Reviewing the suggested chart of accounts 86 Adding your information to the company file 87 Identifying the Starting Trial Balance 89 A simple example to start 89 A real-life example to finish 91 Chapter 2: Loading the Master File Lists 93 Setting Up the Chart of Accounts List 94 Setting Up the Item List 98 Working with the Price Level List 99 Using Sales Tax Codes 99 Setting Up a Payroll Item List 100 Setting Up Classes 101 Setting Up a Customer List 103 Setting Up the Vendor List 107 Setting Up a Fixed Assets List 110 Setting Up a Price Level List 112 Setting Up a Billing Rate Level List 112 Setting Up Your Employees 113 Setting Up an Other Names List 113 Setting Up the Profile Lists 113 Chapter 3: Fine-Tuning QuickBooks 115 Accessing the Preferences Settings 116 Setting the Accounting Preferences 117 Using account numbers 118 Setting general accounting options 119 Setting the Bills Preferences 121 Setting the Calendar Preferences 121 Setting the Checking Preferences 121 Changing the Desktop View 123 Setting Finance Charge Calculation Rules 125 Setting General Preferences 126 Controlling Integrated Applications 128 Controlling Inventory 129 Controlling How Jobs and Estimates Work 130 Dealing with Multiple Currencies 131 Starting Integrated Payment Processing 132 Controlling How Payroll Works 132 Telling QuickBooks How Reminders Should Work 134 Specifying Reports & Graphs Preferences 135 Setting Sales & Customers Preferences 138 Specifying How Sales Are Taxed 140 Setting the Search Preferences 141 Setting the Send Forms Preferences 141 Fine-Tuning the Service Connection 142 Controlling Spell Checking 143 Controlling How 1099 Tax Reporting Works 144 Setting Time & Expenses Preferences 145 Book 3: Bookkeeping Chores 147 Chapter 1: Invoicing Customers 149 Choosing an Invoice Form 149 Customizing an Invoice Form 150 Choosing a template to customize 150 Reviewing the Additional Customization options 150 Moving on to Basic Customization 155 Working with the Layout Designer tool 157 Working with the web-based Forms Customization tool 160 Invoicing a Customer 160 Billing for Time 166 Using a weekly time sheet 166 Timing single activities 167 Including billable time on an invoice 168 Printing Invoices 170 Emailing Invoices 171 Recording Sales Receipts 172 Recording Credit Memos 174 Receiving Customer Payments 176 Assessing Finance Charges 179 Setting up finance-charge rules 179 Calculating finance charges 180 Using Odds and Ends on the Customers Menu 181 Chapter 2: Paying Vendors 183 Creating a Purchase Order 183 Creating a real purchase order 184 Using some purchase order tips and tricks 187 Recording the Receipt of Items 187 Simultaneously Recording the Receipt and the Bill 191 Entering a Bill 192 If you haven’t previously recorded an item receipt 192 If you have previously recorded an item receipt 194 Paying Bills 196 Reviewing the Other Vendor Menu Commands 199 Vendor Center 199 Sales Tax menu commands 200 Inventory Activities menu commands 201 Print/E-file 1099s 201 Item List 202 Chapter 3: Tracking Inventory and Items 203 Looking at Your Item List 204 Using the Item Code column 204 Using the Item List window 205 Using inventory reports 206 Adding Items to the Item List 206 Adding an item: Basic steps 207 Adding a service item 208 Adding an inventory part 209 Adding a noninventory part 211 Adding an other-charge item 212 Adding a subtotal item 213 Adding a group item 214 Adding a discount item 215 Adding a payment item 216 Adding a sales tax item 217 Setting up a sales tax group 217 Adding custom fields to items 218 Editing Items 220 Adjusting physical counts and inventory values 220 Adjusting prices and price levels 223 Using the Change Item Prices command 223 Using price levels 224 Enabling advanced pricing 226 Managing Inventory in a Manufacturing Firm 227 Handling manufactured inventory the simple way 227 Performing inventory accounting in QuickBooks 228 Managing multiple inventory locations 231 Chapter 4: Managing Cash and Bank Accounts 233 Writing Checks 234 Recording and printing a check 234 Customizing the check form 239 Making Bank Deposits 241 Transferring Money between Bank Accounts 244 Working with the Register 245 Recording register transactions 246 Using Register window commands and buttons 249 Using Edit Menu Commands 252 Reconciling the Bank Account 256 Reviewing the Other Banking Commands 260 Order Checks & Envelopes command 260 Enter Credit Card Charges command 260 Bank Feeds command 261 Loan Manager command 262 Other Names list 262 Chapter 5: Paying Employees 263 Setting Up Basic Payroll 264 Signing up for a payroll service 265 Setting up employees 265 Setting up year-to-date amounts 269 Checking your payroll setup data 270 Scheduling Payroll Runs 270 Paying Employees 270 Editing and Voiding Paychecks 272 Paying Payroll Liabilities 273 Book 4: Accounting Chores 275 Chapter 1: For Accountants Only 277 Working with QuickBooks Journal Entries 277 Recording a journal entry 278 Reversing a journal entry 279 Editing journal entries 280 Updating Company Information 280 Working with Memorized Transactions 280 Reviewing the Accountant & Taxes Reports 281 Creating an Accountant’s Copy of the QuickBooks Data File 283 Using an accountant’s copy 288 Reusing an accountant’s copy 288 Exporting client changes 288 Importing accountant’s changes 289 Canceling accountant’s changes 290 Troubleshooting accountant’s copy transfers 291 Using the Client Data Review Commands 291 Chapter 2: Preparing Financial Statements and Reports 293 Some Wise Words Up Front 293 Producing a Report 294 Working with the Report Window 295 Working with Report window buttons 295 Using the Report window boxes 302 Modifying a Report 304 Using the Display tab 304 Using the Filters tab 306 Using the Header/Footer tab 308 Formatting fonts and numbers 309 Processing Multiple Reports 311 A Few Words about Document Retention 312 Chapter 3: Preparing a Budget 315 Reviewing Common Budgeting Tactics 315 Top-line budgeting 316 Zero-based budgeting 316 Benchmarking 317 Putting it all together 318 Taking a Practical Approach to Budgeting 319 Using the Set Up Budgets Window 319 Creating a new budget 319 Working with an existing budget 321 Managing with a Budget 323 Some Wrap-Up Comments on Budgeting 325 Chapter 4: Using Activity-Based Costing 327 Reviewing Traditional Overhead Allocation 328 Understanding How ABC Works 330 The ABC product-line income statement 330 ABC in a small firm 334 Implementing a Simple ABC System 335 Seeing How QuickBooks Supports ABC 337 Turning On Class Tracking 337 Using Classes for ABC 338 Setting up your classes 338 Classifying revenue amounts 339 Classifying expense amounts 339 After-the-fact classifications 341 Producing ABC reports 342 Chapter 5: Setting Up Project and Job Costing Systems 343 Setting Up a QuickBooks Job 343 Tracking Job or Project Costs 346 Job Cost Reporting 350 Using Job Estimates 350 Progress Billing 352 Book 5: Financial Management 355 Chapter 1: Ratio Analysis 357 Some Caveats about Ratio Analysis 358 Liquidity Ratios 359 Current ratio 359 Acid-test ratio 360 Leverage Ratios 361 Debt ratio 361 Debt equity ratio 362 Times interest earned ratio 363 Fixed-charges coverage ratio 364 Activity Ratios 365 Inventory turnover ratio 366 Days of inventory ratio 367 Average collection period ratio 367 Fixed-asset turnover ratio 368 Total-assets turnover ratio 369 Profitability Ratios 369 Gross margin percentage 370 Operating income/sales 370 Profit margin percentage 371 Return on assets 371 Return on equity 372 Chapter 2: Economic Value Added Analysis 375 Introducing the Logic of EVA 375 Seeing EVA in Action 376 An example of EVA 378 Another example of EVA 378 Reviewing Some Important Points about EVA 379 Using EVA When Your Business Has Debt 381 The first example of the modified EVA formula 381 Another EVA with debt example 383 Presenting Two Final Pointers 385 And Now, a Word to My Critics 386 Chapter 3: Capital Budgeting in a Nutshell 389 Introducing the Theory of Capital Budgeting 389 The big thing is the return 390 One little thing is maturity 390 Another little thing is risk 391 The bottom line 391 Calculating the Rate of Return on Capital 392 Calculating the investment amount 393 Estimating the net cash flows 393 Calculating the return 397 Measuring Liquidity 402 Thinking about Risk 402 What Does All of This Have to Do with QuickBooks? 404 Book 6: Business Plans 405 Chapter 1: Profit-Volume-Cost Analysis 407 Seeing How Profit-Volume-Cost Analysis Works 408 Calculating Break-Even Points 410 Using Real QuickBooks Data for Profit-Volume-Cost Analysis 412 Sales revenue 412 Gross margin percentage 412 Fixed costs 414 Recognizing the Downside of the Profit-Volume-Cost Model 414 Using the Profit-Volume-Cost Analysis Workbook 416 Collecting your inputs 416 Understanding the Break-Even Analysis Forecast 419 Understanding the Profit-Volume Forecast 421 Looking at the profit-volume-cost charts 422 Chapter 2: Creating a Business Plan Forecast 427 Reviewing Financial Statements and Ratios 428 Using the Business Plan Workbook 429 Understanding the Workbook Calculations 436 Forecasting inputs 437 Balance Sheet 437 Common Size Balance Sheet 445 Income Statement 446 Common Size Income Statement 450 Cash Flow Statement 451 Financial Ratios Table 457 Customizing the Starter Workbook 463 Changing the number of periods 463 Performing ratio analysis on existing financial statements 463 Calculating taxes for a current net loss before taxes 464 Combining this workbook with other workbooks 464 Chapter 3: Writing a Business Plan 465 What the Term “Business Plan” Means 465 A Few Words about Strategic Plans 466 Cost strategies 466 Differentiated products and services strategies 467 Focus strategies 467 Look, Ma: No Strategy 468 Two comments about tactics 469 Six final strategy pointers 469 A White-Paper Business Plan 470 A New-Venture Plan 473 Is the new venture’s product or service feasible? 473 Does the market want the product or service? 474 Can the product or service be profitably sold? 475 Is the return on the venture adequate for prospective investors? 475 Can existing management run the business? 476 Some final thoughts 477 Book 7: Care and Maintenance 479 Chapter 1: Administering QuickBooks 481 Keeping Your Data Confidential 481 Using Windows security 482 Using QuickBooks security 482 Using QuickBooks in a Multiuser Environment 483 Setting up additional QuickBooks users 484 Changing user rights in Enterprise Solutions 490 Changing user rights in QuickBooks Pro and Premier 491 Using Audit Trails 493 Enabling Simultaneous Multiuser Access 494 Maintaining Good Accounting Controls 495 Chapter 2: Protecting Your Data 499 Backing Up the QuickBooks Data File 499 Backing-up basics 500 What about online backup? 503 Some backup tactics 504 Restoring a QuickBooks Data File 505 Condensing the QuickBooks Company Files 509 Cleanup basics 510 Some cleanup and archiving strategies 515 Chapter 3: Troubleshooting 517 Using the QuickBooks Help File and This Book 517 Browsing Intuit’s Product-Support Website 519 Checking Another Vendor’s Product-Support Website 521 Tapping into Intuit’s Online and Expert Communities 521 When All Else Fails 522 Book 8: Appendixes 523 Appendix A: A Crash Course in Excel 525 Starting Excel 525 Stopping Excel 526 Explaining Excel’s Workbooks 526 Putting Text, Numbers, and Formulas in Cells 527 Writing Formulas 528 Scrolling through Big Workbooks 529 Copying and Cutting Cell Contents 530 Copying cell contents 530 Moving cell contents 531 Moving and copying formulas 531 Formatting Cell Contents 532 Recognizing That Functions Are Simply Formulas 534 Saving and Opening Workbooks 537 Saving a workbook 537 Opening a workbook 538 Printing Excel Workbooks 539 One Other Thing to Know 540 Appendix B: Government Web Resources for Businesses 541 Bureau of Economic Analysis 541 Finding information at the BEA website 542 Downloading a BEA publication 542 Uncompressing a BEA publication 543 Using a BEA publication 544 Bureau of Labor Statistics 544 Finding information at the BLS website 545 Using BLS information 545 Census Bureau 548 Finding information at the Census Bureau website 549 Using the Census Bureau’s publications 550 Using the Census Bureau search engine 550 Using the Census Bureau Subjects index 551 Securities and Exchange Commission 551 Finding information through EDGAR 552 Searching the EDGAR database 552 Federal Reserve 553 Finding information at the Federal Reserve website 554 Using the Federal Reserve website’s information 555 Government Publishing Office 555 Information available at the GPO website 556 Searching the GPO database 556 Internal Revenue Service 557 Appendix C: Glossary of Accounting and Financial Terms 559 Index 589