A Guide to QuickBooks Terminology

Quite a bit of the terminology QuickBooks uses on menus, dialogs and wizard windows needs translation. The phrases are created by people inside Intuit who have agreed among themselves what the words mean, but their concurrence on these terms doesn't always take the English language into consideration. They've created "insider jargon", which almost never works well when taken "outside". Anyone with a minimum understanding of the English language can make serious mistakes in QuickBooks by applying a logical interpretation of the words and phrases presented in the software.

Accountants and professional bookkeepers who train and support users need to look at the QuickBooks terminology they see on the screen with a fresh eye. Read it as if it were English, and forget that you know what it means in QuickBooks-Speak. That makes it easier to train users properly, and saves you the migraine you get trying to figure out why reports don't make sense.

(more…)

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 I’ll note those restrictions when I discuss those features.

Journal Entries

Journal entries provide a quick and efficient way to create transactions directly into 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.

(more…)

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.

Excel Tools for Accountants

I’m on the phone with Frank while I’m driving on the 405. (I’m not breaking the law, because the state legislature thinks it’s distracting to hold a cell phone but not to speak via Bluetooth.) Frank, who does all the accounting for my company, has some strong opinions about Excel. He uses it frequently at his clients’ sites, where he pulls data together from various sources to construct cost and income analyses. Sometimes he does this as part of an audit, sometimes simply as a matter of making a point he wants the client’s managers to appreciate.

What Tools do Accountants Need?

That, says Frank, is why he uses Excel. The formatting that he can get into the reports, and the charts that he can create, are so good that his clients aren’t distracted by lousy appearance. Instead, they concentrate on the message that Frank’s trying to get across.

Frank tells me that he’s faithfully taken courses in Excel every time a new version comes out. He feels duty bound to do that, but by now he’s really questioning how much benefit he’s gotten from those courses – even when all the Microsoft Office applications switched from the traditional menu structure to the Ribbon. The courses teach him how to format a working capital analysis, how to create a chart of budget variances, and where to go for a page-break preview of a worksheet.

But the courses never seem to get to tools that would really make his on-site time more effective. It’s ridiculous, Frank says, but he seems to have to type the names of the months and quarters into worksheets every time he visits a client. Same thing with a chart of accounts. Ditto repetitive formulas and statement footings.

I explain to Frank that he can get Excel to do those things automatically. I also ignore him muttering, “This is so cool,” as I walk him through automatically getting month names onto a worksheet. Frank wants more, but it occurs to me that I’m not absolutely certain he’s off the clock, so I say goodbye and concentrate on avoiding a swarm of SUVs as I merge onto the 5. I try not to dwell on a news story that California drivers carry more guns in their glove compartments than insurance policies.

And I resolve to start writing a chapter when I get home. The chapter will discuss some tools that those Excel courses never seem to get around to.
(more…)

Petty Cash Expenses

Accountants frequently receive questions about how to handle cash layouts for business expenses. Usually, the questions involve one of the following scenarios:

• Someone used cash or a personal credit card to buy something for the company and that person needs to be reimbursed.
• Someone used the debit card for the business account to withdraw cash and didn’t use all of that cash for a business expense; the remaining cash needs to be tracked.
• Someone is going to be traveling for the company and needs cash in advance (and will need to return unspent cash).

There are other scenarios similar to these, but the ultimate question is, “How do I manage cash transactions that fall outside of the usual data entry for vendor bills and payments”?

(more…)