Archive for November, 2011

Running QuickBooks 2012 Premier Editions Excerpt – Chapter 4

Wednesday, November 30th, 2011

QuickBooks Premier-Only Accounting Functions


The QuickBooks Premier editions include features that provide efficiency, power, and added value to your accounting tasks. These features, which are unique to the Premier editions, are the subject of this chapter.

Some of these features are only available in certain Premier editions, and We’ll note those restrictions when discussing those features.

Journal Entries

Journal entries provide a quick and efficient way to create transactions directly in the general ledger (such as depreciation entries), and to fine tune existing account balances (for job costing, class assignments, or allocation across classes). The Premier editions offer some nifty features that add convenience and power when you're creating journal entries.

If you're tracking classes, you can use a journal entry to post existing transactions to a class. All you have to do is journalize the appropriate totals by moving amounts in and out of the original accounts, and adding the class information to each line of the JE. This is a great way to allocate overhead expenses to the divisions, departments, or programs (in nonprofit organizations) for which you established classes.

Similarly, journal entries provide a way to add job costs to existing account totals; merely create a JE that applies a customer or job against existing postings.

Entering a single JE transaction to include class or job information to multiple previous postings is faster than editing each original transaction to add the class or job.

However, we frequently hear from business owners and accountants about JEs created for job costing that don't seem to work. The job costing reports don't reflect the information that was entered in the JE.

Fine-tuning your account balances with JEs can be a trip down a rabbit hole if you don't understand the way QuickBooks stores information contained in JEs (see the section " JE Source and Target: Solving the Mystery ").

NOTE: We use the term journal entry, and abbreviate it JE, out of habit. QuickBooks call this transaction type a General Journal Entry, and uses the abbreviation GJE.

Adding a JE Icon to the Icon Bar or Favorites Menu

If you use journal entries frequently, add an icon to the icon bar, using the following steps:

                   1.  Choose Company | Make General Journal Entries to open a blank GJE window.

                   2.  On the QuickBooks menu bar choose View | Add "Make General Journal Entries" to the Icon Bar.

                   3.  In the Add Window To Icon Bar dialog you can change the default Label or Description text, and also change the default graphic for the icon.

                   4.  Click OK to place the icon on your icon bar.

The text in the Label field represents the text that displays under the icon on the icon bar. The text in the Description field is the text you see when you hover your mouse over the icon (also called a tooltip).

If you prefer to use the Favorites menu instead of the icon bar, use the following steps:

                   1.  If the Favorites menu isn’t on the Menu Bar, add it by choosing View | Favorites Menu.

                   2.  When the Favorites menu appears, choose Favorites | Customize Favorites, which opens the Customize Your Menus dialog.

                   3.  In the left pane (labeled Available Menu Items), select Make General Journal Entries.

                   4.  Click Add to move your selection to the right pane (labeled Chosen Menu Items).

                   5.  Click OK to add this command to your Favorites menu.

AutoFill Memos in Journal Entries

In QuickBooks Pro, the text you enter in the memo field of any line in a journal entry stays with that entry line. This means you see your comments when you open the register for the account that entry line posted to.

For example, if you are entering a journal entry for a correction your accountant told you to make, you could enter the comment “Bob’s Memo-5/4/13” (assuming your accountant’s name is Bob).

Most people enter memo text only in the first line of the journal entry. Later, if they view the register of one of the accounts involved in the JE (the accounts below the first line) there’s no text in the memo field. You don’t see any explanation for the transaction unless you open the original transaction. To avoid that problem, some users enter (or copy and paste) the text in the memo field  manually, on each line of the General Journal Entry. That’s extra work!

QuickBooks Premier editions offer a clever feature called AutoFill Memo In Journal Entry. This means that the text you enter in the Memo field on the first line of the transaction is automatically entered on all lines of the transaction. When you view the register of any account  involved in the journal entry, the memo text is available to help you  remember or understand the reason for the transaction.

This feature is enabled by default in the Preferences dialog, on the My Preferences tab of the Accounting section. If your memo text isn’t repeated on the second line of your JE, somebody disabled the feature. Choose Edit | Preferences, select the Accounting section of the  Preferences dialog, and enable it.

TIP FOR ACCOUNTANTS: For your clients who aren’t using one of the QuickBooks Premier Editions, you might want to pass along the suggestion to copy and paste memo text to every line of a JE. This means you’ll know the reason for the JE when you see it in an account register. Without the memo, you have to open the original transaction to see the memo that appeared only on the first line.

Auto Reversing Journal Entries

To create an auto reversing journal entry, open the Make General Journal Entries window by choosing Company | Make General Journal Entries.

While the Help files declare that only the QuickBooks Premier Accountant and Enterprise Editions provide the ability to reverse journal entries, the feature is actually available in all Premier editions, including the new Professional Bookkeeper Edition.

To create a reversing journal entry follow these steps:

                   1.  Enter the data for the journal entry.

                   2.  Click the Reverse icon (instead of clicking Save & Close, or Save & New).

                   3.  QuickBooks displays the Recording Transaction dialog to tell you that you haven’t recorded your entry, and offers to save it. Click Yes to record the entry.

                   4.  The GJE window displays the reversing entry (don’t worry, the original entry was saved, click Previous to see it if you don’t believe me).

                   5.  Click Save & Close if you’re finished with the GJE window; click Save & New to enter another journal entry.

The Reversing Entry is automatically dated the first day of the following month, but you can change the date. If you’re using automatic numbering for GJE transactions, the reversing entry number has the format xxxR, where xxx is the number of the original journal entry.

Adjusting Journal Entries

Available only in QuickBooks Premier Accountant Edition, this feature lets you specify a journal entry as “Adjusting”. The GJE window includes a check box labeled Adjusting Entry, which is enabled by default.

The way QuickBooks reports on adjusting entries, compared to  journal entries that aren’t designated “adjusting”, is inconsistent. After you create an adjusting entry, when you view the registers of the affected accounts, the transaction type is GENJRNL. That’s the same transaction type that QuickBooks records for a journal entry that’s not configured as an adjusting entry.

QuickBooks has a built-in report of adjusting entries that you can see by choosing Reports | Accountant & Taxes | Adjusting Journal Entries. This report, like the feature, is only available in Premier Accountant  Edition. Also available in Premier Accountant is the Show List Of Entries features. Click the Show List button on the Main tab to see a list of GJEs to which you can apply a date filter.

Discussing adjusting entries always makes me want to ask, "What's the difference between an adjusting entry and any other type of journal entry; aren't all JEs adjustments?" So, I literally asked the question of my own accounting firm, and the answers I received indicate that the difference is subtle, but apparently understood by all accountants. One of the accountants replied, "It's really a distinction without a difference; an adjusting journal entry is posted to correct or update an account in the general ledger." Another accountant added, "Often when referring to an adjusting entry, the term is used in the sense of preparing a financial statement and not as a permanent entry; it's often reversed the next  day".

Send GJEs

A potentially handy feature for accountants has been added to the Premier Accountant Edition (and only the Accountant Edition) called Send GJEs. The concept is fairly straightforward. Much of the work done in client files is journal entries. This feature allows you to create journal entries in your copy of the client’s file while the client is still working in his, and then send the new journal entries to the client for import. There’s no need for an Accountant’s Copy and its inherent restrictions.

Using the feature is also quite simple. You have two ways to access the Send General Journal Entries window:

                    •  Use the Make General Journal Entries command (Accountant | Make General Journal Entries). When you need to create a new JE to send to the client use this command. After you create the GJE(s) click the Send GJEs command to open the Send General Journal Entries window (see Figure 4-1).

                    •  Use the Send General Journal Entries command. If you want to send existing journal entries go directly to the Send General Journal Entries window by choosing Accountant | Send General Journal Entries.


Figure 4-1: Choose the existing JEs to send

Once in you’re in the Send General Journal Entries window it’s a simple mater of locating the appropriate journal entries, checking them off, and either e-mailing them as attachments or saving them as files to be sent later. When the client receives the file all she has to do is import it.

TIP: If your client is savvy enough to make decisions about which journal entries to import, you can check the Allow Recipient To Select Which GJEs To Post To File option. It is not checked by default, which means the client will be forced to import all or none unless you enable the option.

When the client receives the file, all she has to do is select File | Utilities | Import General Journal Entries to locate the file, and open it in the Add General Journal Entries To Your File window. From there she can review and add the GJEs.

Can’t Display QuickBooks Account Numbers Properly

Wednesday, November 30th, 2011

How to Make QuickBooks Display Accounts by Number

A reader wrote to explain that he'd carefully planned the numbering system for his chart of accounts in QuickBooks, putting everything in the order in which he needed it. However, he doesn't know how to get the QuickBooks COA to display accounts according to his numbers; he wants the list to use his numerical order in every report and window.

QuickBooks sorts accounts by type first, and account number second. Therefore, you have to design your account numbers to match that order if you want to display the COA in numerical order. Here's the sort order:

  • Assets
    • Bank
    • Accounts Receivable
    • Other Current Asset
    • Fixed Asset
    • Other Asset
  • Liabilities
    • Accounts Payable
    • Credit Card
    • Other Current Liability
    • Long-Term Liability
  • Equity
  • Income
  • Cost Of Goods Sold
  • Expense
  • Other Income
  • Other Expense

Just keep in mind that QuickBooks will always ignore your account numbering scheme in favor of the account type. For example, if your liability accounts begin with 10000 and your asset accounts begin with 20000, QuickBooks will sort them by type, putting asset accounts (20000) at the head of the Chart of Accounts, followed by liability accounts (10000).


QuickBooks File Won’t Open – Displays Error About Report

Tuesday, November 29th, 2011

How to Open QuickBooks with a Clean Desktop

Rather frequently we hear from readers who ask for help because the company file won't open. QuickBooks displays an error message about a problem with a memorized report or a corrupt transaction, and then freezes.

This occurs when a window that was open when the file was last closed contains something that has become corrupt. The most common problem is with memorized report windows; something has corrupted the report. Many users keep reports, transaction windows, or lists open when they close their company files because they use those windows constantly while working in QuickBooks.

If something goes wrong with one of those open windows, QuickBooks freezes when it tries to open the file. To avoid this, we recommend that you automatically close all open windows when you close the file. To configure QuickBooks to close all windows when you close the file go to Edit, Preferences and choose the Desktop View icon. In the My Preferences tab select the option labeled Don't Save The Desktop. Create icons for fast access to the windows you use most; it only takes a second to display them.

If you encounter this problem, press and hold the Alt key when you launch QuickBooks. Release the Alt key when you enter your password, then press the Alt key again before clicking OK on the Login dialog. Continue to hold the Alt key until the company file opens – the file opens with no windows open. Your first chore is to change the configuration options as described in the previous paragraph.


Running QuickBooks in Nonprofits Excerpt – Chapter 15

Monday, November 28th, 2011

QuickBooks Fundraising Tools

QuickBooks contains tools and features that can help you raise money, especially from donors and members. These constituents are the primary sources of income for many small nonprofit organizations. In addition, you need to track all your fundraising efforts in QuickBooks transactions.

It’s possible to track individual members and donors in QuickBooks, but you need to be careful about keeping the number of entries within the size limits imposed by the QuickBooks structure (see the next section to learn about file size limits).

The more information you keep about members and donors in QuickBooks, the easier it is to create targeted fundraising campaigns. Sending a fundraising letter, or creating a fundraising event and targeting people who have a known interest in some specific angle of the fundraising topic can sub- stantially increase the amount of money you raise.

In this chapter I’ll show you how to track information about members and donors in ways that are useful for fundraising, and for tracking participation in activities. I’ll also explain the QuickBooks  configuration settings you need for tracking the income and expenses involved with fundraising.

Writing Off Old Unpaid Invoices in QuickBooks

Monday, November 28th, 2011

How to Write Off Unpaid QuickBooks Invoices

We frequently receive queries from QuickBooks users about the process involved in writing off old A/R balances. Some users want to create a credit with the date of the open invoice; other users ask whether they should use the current date. Some users ask whether they have to use the same item used on the original invoice.

For the question about dates, the rule is simple. NEVER enter a QuickBooks transaction dated in a previous tax year. Your books match your tax return so the numbers can’t be changed.

For the question about the item to use, I prefer to create a QuickBooks item named Writeoffs and link it to an Income account named Writeoffs or Prior Year Writeoffs (posting credits to this account produces a negative income total, and your accountant may prefer to make this account an Expense account). The advantage of this is that it makes it easy to track and report on your write-offs. If you’re writing off receivables that are several years old, the amount may be substantial. Since this lowers your net profit, your accountant (or the IRS) may want to know why this year’s net profit is lower than previous years. The ability to isolate the write-offs (with an Item report or a report on the Write-offs Income account) makes what you did quite clear.

After you create the credits, you have to use Receive Payments to apply the credits to the open invoices. If you don’t, the old invoices will continue to appear on QuickBooks aging reports, even though the customer now has a zero balance.

Remember that write-offs are not the same as Bad Debts. If you file taxes on a cash basis, you don’t have bad debts. Consult your accountant about the way to proceed before you decide to write off overdue amounts in QuickBooks.