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PALMAX BUSINESS

&
ICT COLLEGE
In collaboration with

QuickBooks Premier
Accounting

COURSE MANUAL
Compiled and edited by:
John W. Gitahi

Eco Bank(Near Main Stage)- Karatina


0728 59 55 55
http://palmaxcollege.kbo.co.ke

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FOREWORD
Accounting packages have become part of the daily life for business manager and
Accountants.
Whether you are a manager in practice, or in training or a student in a business related
field such as KASNEB CPA,s ,ATC or any other such business area including those in
entrepreneurship, you will find Accounting Packages makes your daily duties
tremendously easy.
For instance, with QuickBooks and every other Accounting packages, you just require to
enter the source documents and the computer generates the reports at any time
automatically.
Research has also shown that if you have Accounting packages knowledge, you have a
25% more chance of getting a job.
This manual, has been prepared with you in mind. I have therefore used very simple
language and I will accompany the course with useful exercise at the end of each section.
QuickBooks is a good start for Accounting Packages and offers the best background
towards further training in other accounting packages like Sage, Pastel, Sage Pastel etc
Hope by the end, you will have some basic knowledge in accounting systems operations.
It may not cover everything, but it covers enough to start you off.
First published: 2010 More Printouts:2011

About Palmax Business & ICT College


Palmax has been offering training in Business & ICT Courses since 2006.
We have training hundreds of students and have always tried to offer the best to our
students.
We have been voted No.1 severally by our students in the past. We have also produced
best performing students countrywide in ICT and CPA course, most recently in 2008.
You can register with us in the following courses:
1. CPA 1-6
2. ATC 1 & 2
3. Information Communication Technology Technician
4. Computer Repair (A+)
5. Computer Networking (N+)
6. International Computer Driving License (ICDL)
7. Graphics Design
8. Programming etc
9. Business Management
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QUICKBOOKS PREMIER ACCOUNTING
Def: QuickBooks is an accounting package which deals with the double entry principle of accounting for
the debits and corresponding credit entries. The double entry is usually done behind the scenes once
documents like cheques, bills, invoices etc are issued.

WHO USES QUICKBOOKS


Although QuickBooks is widely used by professional accountants, most other computer operators will
also require some basic operating skills in QuickBooks as its the most commonly used accounting
entries package for most businesses;

QuickBooks does not have a limit and it can be used in all businesses to record and trace all business
transactions. It is however most common in the following businesses;

a. Accountancy
b. Advertising
c. Architecture
d. Consultancies & Service Businesses
e. Construction
f. Estate Agencies
g. Farming
h. Printing and Graphic Design
i. Product Sellers
j. Writers and other Artists.

STARTING QUICKBOOKS
Click the start button and the point at all programs> then QuickBooks premier or whichever version
installed in your computer (note that Intuit releases newer versions each year though the changes do not
make them fundamentally different)

SECTION 1: YOUR COMPANY SET UP

GETTING STARTED WITH THE QUICKBOOKS EASYSTEP INTERVIEW


Unlike other application packages, QuickBooks requires that you first enter the details of your business
before you can be able to use it. This we do using the QuickBooks EasyStep Interview.
The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to
help you set up your product sales business in QuickBooks. If you are not an incorporated business, you
can still use a QuickBooks company to meet your accounting needs. I recommend the interview as the
easiest way to get started and to customise QuickBooks for your type of business.
Just follow the wizard and enter the relevant details. Be sure to read the explanations available in each
section.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting
up a QuickBooks company" chapter in the Getting Started Guide.(normally given by the seller when you
purchase QuickBooks for the first time)

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NAVIGATING IN QUICKBOOKS
OVERVIEW OF THE BUTTONS ON YOUR QUICKBOOKS WINDOW
INVOICE: for invoicing your customers
PURCHASE ORDERS (PO): FOR POSTING PURCHASE ORDERS
CHEQUE: for posting cheque payments
BILLS: for entering invoices you receive from your creditors
REGISTER: for recording all transactions within an account.
ACCOUNT: for chart of accounts
CUSTOMER: for entering a list of your customers / debtors
VENDORS: for entering a list of your suppliers / creditors
ITEM: for entering a list of items
REMINDERS: for showing your to do notes

Understanding QuickBooks terminology


QuickBooks uses a few special terms that you should be aware of:
1. Bill
A bill is what you receive from your vendor or subcontractor. QuickBooks tracks the bills you enter in
an accounts payable account until you pay them.

2. Chart of accounts
A list of accounts that you use to track how much money your company has, how much money it owes,
how much money is coming in, and how much is going out. When you set up your QuickBooks
company, you can choose a preset chart of accounts designed especially for product sellers.

3. Classes
A way to categorise income and expenses. For example, you can categorise income and expense by a
class that you define, such as departments in a store (women's, men's, children's).

4. Items
The items on your QuickBooks Item list represent the products you sell. Items also include anything you
might want to put on an invoice, such as services, carriage charges, payments, and discounts.

5. Sales forms
QuickBooks has three types of sales forms: a sales receipt (if you get paid immediately), an invoice (if you
get paid later), and a credit memo (for recording a return).

CUSTOMERS (DEBTORS)
A customer is a buyer and also a debtor (when he buys from you on credit). QuickBooks traces customer
entries through the debtors control account. We choose accounts receivable in the chart of accounts
(A/R)

Tracking your customers


Many product sellers do not need to track who their customers are. For example, a restaurant or a high-
volume retail shop probably would not want to track their customers. But if you enter each sale in
QuickBooks, you could also keep track of your customers if you wish to. In QuickBooks, the list that
holds information about your customers is called the Customer:Job list.

Customer types
When you set up your customers, you can also enter a customer type for each one. The customer type
lets you keep track of the different types of customers you serve and gives you the information you need

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to analyse your customer base. You can categorise each customer in a way that is meaningful for your
business.
The customer types do not appear on QuickBooks forms, but you can create reports based on the
information. You can also print mailing labels and summary statements based on customer type.

Examples of customer types for product sales businesses


o Retail - shop
o Retail mail order
o Wholesale
If you want a further break down of your customer types, you could add subtypes.
To enter customers
Click the customers icon, go to customer job> customer. Enter the relevant details such as name,
address, contact details etc.
Customers with multiple 'Ship To' addresses
Your customers will most likely have one billing address, but they may have multiple 'ship to' addresses.
However, QuickBooks lets you enter only one 'ship to' address per customer, and can display that
address on invoices and other sales forms.
But there's an easy way to record several shipping addresses in the customer Notepad and quickly paste
them into the invoice Ship to field.

To handle multiple shipping addresses:


1. To enter the customer in QuickBooks, choose Customers:Jobs from the Lists menu, and click
New.
2. Enter the customer information, but leave the 'ship to' field blank.
3. Click the Notes button, and enter the different shipping addresses in the customer notepad.
4. When you invoice that customer, choose the customer's name in the Customer:Job field at the
top
of the invoice.
5. From the Edit menu, choose Notepad.
6. With your cursor, select the 'ship to' address you want and press Ctrl+C.
7. Close the Notepad window.
8. Place the cursor in the 'Ship To' field on the invoice, and press Ctrl+V.
DELETING A CUSTOMER
- Highlight the customer from the customer job list
- Choose edit option from the menu bar
- Choose delete customer job
VENDORS (CREDITORS)
Vendors are people or firms you buy items that you sell from or who supply you goods and services
QuickBooks tracks sellers through the creditors control account. We select accounts payable (A/P) from
the chart of accounts.
Adding a vendor
You can add new vendors to the list at any time. QuickBooks uses the Vendor list to hold information
about the people and companies you do business with. For example, this list could include the phone
company, and your office supplies vendor.
1 From the Lists menu, choose Vendor.
2 Choose New from the Vendor menu button.
3 In the Vendor field, enter the name of the vendor as you'd like it to appear on your Vendor list.
For example, if the vendor is an individual and you list individuals last name first, that's how you
should enter the name.
4 Enter the information requested on the Address Info tab and Additional Info tab.
5 Record the vendor.
DELETING A VENDOR
- Highlight the vendor from the vendor list
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- Choose edit option from the menu bar
- Choose delete vendor

CREATING ITEMS
If you purchase items ready for resale, keep them in stock, and then sell them, QuickBooks can track the
current number in stock and the value of your stock after every purchase and sale. See "Using Stock part
items".
However, you may not want to track all product sales as Stock items. QuickBooks' Item list has a Non-
stock part type item to track product sales for products you do not want to track as stock. See "Using
Non-stock part items".

Using Stock part items


Create Stock part items for the products you sell if you need the following benefits:
When you use purchase orders to buy stock items, QuickBooks updates your stock, so you know which
items are on order and when they're due to be received.
You can easily keep track of the cost to you of the items you have sold (the cost of goods sold).
You can easily keep track of the income you receive from the resale of stock items.
You always know your current quantities on hand.
You always know the current value of your stock.
Using Non-stock part items
Create a Non-stock part item for each product you sell that doesn't require the tracking features of a
Stock part item.
Using Discount items
Typical discounts in product sales businesses include:
o cash discount
o early order discount
o employee discount
o volume discount
o seasonal discount
o trade discount
o special customer (senior, child, preferred)
These Discount items can be created as percentages or as fixed-amount discounts.
Using Group items for special discounts
Suppose you want to give a special discount on an item for promotional purposes or to sell an item
quickly. Create a discount item and then a group item that groups the product itself with a discount item.
If the discount is good for a specific period, you can enter the time period in the Group item's
description field so you will be reminded of the discount effective date.

Using Other Charge items


Other Charge items can include things like carriage fees. When you create the item, leave the amount
blank. You can enter the amount directly on the sales form. You may want to create a separate income
account called Carriage.

Grouping items
If you want to group some items together because these items are frequently sold together, you can use
QuickBooks to track the cost of a group of items. Many product sales businesses find it convenient to
group items.

Using Service items


Create a QuickBooks Service item for each type of work you do for clients, whether it's done by a
partner, salaried employee, subcontractor, or hourly employee.

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When you set up items, you also designate an income account you want them assigned to. (You'll
typically have many items assigned to the same income account.) You can set up your items all at once or
as you go, as you're filling out an invoice.
CHART OF ACCOUNTS
All accounts in QuickBooks are usually listed in the Chart of Accounts. We make journal entries from
the chart of accounts.
Your Chart of Accounts, including balance sheet, income, and expense accounts, tracks all your
transactions.

Customizing your Chart of Accounts


In QuickBooks, an account represents a group of transactions and is used for tracking and reporting
purposes. The complete list of accounts for your company is called the Chart of Accounts. When you set
up your QuickBooks Company, you can choose a preset chart of accounts designed especially for
product sales businesses. This preset chart of accounts gives you a head start in creating your balance
sheet accounts, income accounts, and expense accounts.
You may find as you review the preset chart of accounts that you need to add or delete accounts from
this list, or add subaccounts.
For instance, If you keep cash on the premises, you'll want to add an account for cash kept at the store
called, Petty Cash (Bank account).
Important: As a general rule, you should reserve the accounts on your Chart of Accounts for broad
categories, and use items and sub items to see more detail about items you've sold or bought.
CREATING NEW ACCOUNTS
If you are a limited company
If you are a limited company, you will need to set up special accounts to record dividend payments and
corporation tax.
To set up accounts for dividends go to the Lists menu and select Chart of Accounts, and click on the
Account button. Then click on New and complete the New Account form as follows:

Account type Name


Other expense Dividend expense
Other current liability Dividends payable
Other current asset Advance corporation tax recoverable
Other current liability Advance corporation tax payable
Other expense Mainstream corporation tax
Other current liability Corporation tax payable
When setting up any new ledgers in our chart of accounts, we MUST specify the type of account to be
associated with the specific ledger as shown below:
TYPE OF ACCOUNT GIVEN NAME OF LEDGER
BANK We type the name of the Bank e.g. Equity, Barclays etc
ACCOUNTS RECEIVABLE For debtors
OTHER CURRENT ASSET Cash
FIXED ASSET Machinery, Land & Building, Furniture and Fittings
OTHER ASSET Includes goodwill, investments you have made etc
ACCOUNTS PAYABLE For creditors
CREDIT CARD For credit cards e.g. Visa Electron
OTHER CURRENT LIABILITY Loans from Individual, With holding tax etc
LONG TERM LIABILITY Loans from institutions
EQUITY For capital
INCOME Sales
OTHER INCOME All other incomes apart from sales e.g. dividends receivable,
interest receivable , rent receivable etc
EXPENSE For salaries and wages
OTHER EXPENSE All other expenses
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You should leave the tax line and VAT code fields empty.

SECTION 2: PROCESSING TRANSACTIONS IN QUICKBOOKS

INTRODUCTION TO ENTERING SALES IN QUICKBOOKS


The way you record sales in QuickBooks depends on how much detail you want to enter. You can enter:
Every single sale paid on the spot
Summaries of sales based on cash register or manual receipts (usually daily)

ENTERING EACH SALE IN QUICKBOOKS


Use the Enter Cash Sales window to record a sale paid on the spot. Cash sales include payments by cash,
credit card, or cheque.

ENTERING SALES TO BE PAID LATER


Use the Create Invoices window to record sales for which you will receive payment later.

POSTING BILL
Choose bills button
Choose the vendor using the drop down arrow
Select the items , type in the cost and the quantity
NB: Always make sure that the stock feature is on before you record bills or post purchase orders. If not,
use the preferences window to turn the stock feature on.

RECEIVING PAYMENTS AND MAKING DEPOSITS (IF ENTERING EVERY SALE)


Use the Receive Payments window to record customer payments you receive after you've created an
invoice.
When you make deposits at your bank, you probably make out separate deposit slips for amounts you'd
like to have listed separately on your bank statement. You would do the same thing in QuickBooks, in
order for your separate payment methods to appear separately when you reconcile the bank account.

To deposit payments:
1. From the Activities menu, choose Make Deposits.
Important: To make reconciliation with your bank statement easier, do a separate "Make Deposit"
for each payment method such as cash/cheques, Access card, and so on.

2. In the Payments to Deposit window, check all sales paid by one payment method.

3. Click OK.
4. In the Make Deposits window, choose the account you want to deposit the cheque to, for
example, Current.
If this is the cash payment you want to keep on hand instead of depositing, choose the Petty Cash
account you created.

5. Click OK.
HANDLING CUSTOMER RETURNS (RETURN INWARDS)
If you accept returns, you will need to cancel the sales in QuickBooks.
In QuickBooks, you can cancel a sale in three ways:
Void the sale
Delete the sale
Create a credit memo
With all three ways, QuickBooks automatically reduces the appropriate income account and reduces the
VAT account.
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If you use a credit memo to handle the return, make sure you use the same item as was used on the
original sales receipt or invoice. If the item is taxable, make sure you also include VAT on the credit
memo.
ORDERING FOR SUPPLIES
If you buy and also sell, then when your item quantities reaches reorder level, you will require to ask for
more supplies from your vendors when the item quantities reaches the reorder level.
- We post purchase orders by using the purchase order icon from the menu bar
- The goods received note and the bill usually completes the purchasing procedure.

COST OF GOODS SOLD- Its the account that QuickBooks uses to track your cost for the items
you sell. We choose/ associate this type of account with cost of goods sold account in the chart of
accounts.
QuickBooks usually updates this account by multiplying the item sold by its buying price
This figure will appear in the profit and loss account of the company when computing profits / losses.
The rest of the options are optional e.g preferred vendor e.t.c.

POSTING RETURNS OUTWARDS (Returns to your supplier)


Return outwards occurs when we return goods to our suppliers may be due to them being damaged,
incorrect items etc

- Choose the bills option from the menu bar or navigator


- Select the credit option
- Choose the vendor using the drop down arrow
- Select the items to be returned, type in the quantity being returned, the cost etc
- Click OK

CASH/ CHEQUE PURCHASE AND PAYMENTS


- Choose the cheque option
- Choose or type in the individual being paid or the account
- Specify the account being settled e.g expense account, A/P accounts etc
DELETING A TRANSACTION
All the transaction above can be deleted and the double entry removed from quickbooks provided the
account concerned does not have a balance.
- Highlight the transaction account concerned
- Choose the edit menu
- Choose delete transactions (or else void)
Remember you cant delete with balances since such balances have been used in the final accounts.

OTHER ENTRIES: JOURNAL ENTRIES(CHART OF ACCOUNTS)


A journal entry shows a double entry of every transaction and has a Debit side and a Credit side.
The journal is mostly used to enter transactions other than sales / purchase of stock e.g. buying/
disposal of a fixed asset, paying of recurrent expenditure such as rent, taxation etc.
The following transactions can be recorded through the Journal:
Purchase of Fixed asset
DR: The fixed asset account
CR: Cash/ Bank / Creditor (if bought on credit)
Sale of Fixed assets
DR: Cash/ Bank / Debtor (if sold on credit)
CR: The fixed asset account
Paying expenses e.g. rent / insurance
DR: The expense account
CR: Bank / Cash
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Receiving Income e.g rent receivable
DR: Cash/ Bank
CR: The income account
To record the opening balances or starting a new business
DR: all assets account
CR: All liability accounts
COMPUTERISING AN ALREADY EXISTING BUSINESS
If the business had been existing, then we first prepare the last periods balance sheet. Then all the figures
from the initial balance sheet are entered as the opening balances for the new accounts.
NB: When entering the opening balances from the existing balance sheet, we can create all the
necessary accounts first and then we use the chart of accounts to record the double entry opening
balances.
All these figures should be entered from the previous balance sheet.
Otherwise, the opening balances for Assets and Liabilities are entered directly and automatically as you
create the ledgers in the chart of accounts. But the opening balances for Debtors and Creditors are
posted using the double entry:
DR: Debtor
CR: Opening balance equity
Or
DR: Opening balance equity
CR: Creditor
TREATMENT OF WITHDRAWALS
E.G. He withdrew 5,000/- from the bank for office use
DR: Cash 5,000/-
CR: Bank 5,000/-
But if it was for personal use;
DR: Drawing 5,000/-
CR: Bank 5,000/-
TO MAKE A JOURNAL ENTRY
- Choose the activities option
- Choose other special transactions / options or make journal
- Type in the date and the number of the journal entry
- Choose the account to be debited (using the rules above)
- Choose the account to be credited (using the rules above)
V.A.T. (Value Added Tax)
This is the percentage sales tax charged on various goods and services.
When buying an item, the VAT Can be either inclusive or exclusive
The cash price paid can also either be gross (inclusive) or net (exclusive)
To specify the VAT We specify a code and the percentage etc during set up in the easy step interview
and the name of the collecting agency e.g. Kenya Revenue Authority for Kenya etc
QuickBooks will usually be tracking VAT records and transactions behind the scenes. If you pay any
other taxes in your firm, you must set it up similarly in QuickBooks when setting up your company file
e.g for the double entry for V.A.T , the computer maintains a separate account like this;
VAT ACCOUNT

Purchase VAT (Input VAT) Sales V.A.T. (Output VAT)

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CONTRA ENTRY
It is where both the debit entry and the credit entry are shown in the books without affecting an
outsider.
It is the art of transferring money from one account to another e.g. from cash to bank and vice
versa.
There are two ways of posting a contra entry;
- by use of the journal
- use of transfer money
From the activities menu, choose transfer money
Select an account to transfer from and an account to transfer funds to
Enter the amount you want to transfer
Click ok

CREATING BUDGETS
Because consultancies and service businesses can involve large amounts of money, you might want to set
up budgets for your firm as a whole or for a particular client project. By setting up a budget, you can also
get an understanding of the costs you have committed for the financial year.
You can set up budgets that show your projected income and expenses and your projected account
balances. You can then can compare your actual income and expenses or your actual account balances
against your plan by using budget reports.
Here are some guidelines on setting up budgets:

To create a budget by job (instead of month by month), in the Set Up Budgets window, enter the budget
for the entire financial year in the field for the first month of the financial year. Make sure to choose the
job you are using to track the project. If you don't want a breakdown by account, don't choose any
account.
Budgets that extend across two financial years need to have the date adjusted on the report to
cover two years, for example, from 1/1/96 to 1/1/98.

SECTION 3: PAYROLL PROCESSING


THE PAYROLL
With QuickBooks you can set up a payroll to pay your employees salaries and wages, and to account for
PAYE tax and national insurance.
You can use QuickBooks payroll to track employee time on your accounting jobs. When your employees
charge time to jobs on a weekly timesheet, be sure to record time spent as a payroll item. Then when you
run the payroll and pay the employee for the hours charged, the time spent at the employees rate will be
automatically charged to the job as a cost.

Adding payroll items

QuickBooks maintains a list of everything that affects the amount on a payroll payment or that is for an
employer expense related to payroll. This list is the Payroll Item list.
QuickBooks automatically provides some payroll items for you. These include payroll items for salary,
two types of hourly wages, national insurance, and income tax. You don't have to worry about adding
these payroll items to the listthey're already there.
To fully track your payroll, you may need to add some more payroll items to the list. You can add payroll
items for employee deductions of any kind; additions (such as bonuses); commissions; and employer-
paid expense (such as employer-paid health insurance).
Adding payroll items

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Depending on your company's payroll, you may need additional payroll items of the following types:
o Yearly Salary
o Hourly wage
o Deduction
o Addition
o Commission
o Employer contribution
Adding an employee
1 Display the Employee list.
2 Choose New from the Employee menu button.
3 Complete the Address Info tab.
The information you enter in these fields can be exported and used in a form letter.
What the Initials field is used for
Fields to fill in if you are using QuickBooks payroll
4 On the Additional Info tab, enter any information you want to store for this employee.
TRACKING TIME
Time is the most valuable resource for any business, especially in accounting firms, who generally sell
their services based on time taken.
You can track time with QuickBooks by using the Time Tracking feature found under the Activities
menu, or alternatively by clicking on the Time icon.
QuickBooks allows you to enter time in two ways:
PAYROLL EXPENSE ACCOUNT
This account tracks payroll items that are an expense to your company. They include Yearly Salary
Hourly wage Deduction Addition Commission Employer contribution etc

CREATING PAYROLL ITEMS:


From the employees menu, choose payroll information;
QuickBooks maintains three accounts namely;
EMPLOYEE WAGE ACCOUNTS: We enter the name of each account that we use to track the
employee wages and bonus e.g. salaries and wages, commission, overtime etc
EMPLOYEE WITH HOLDING ACCOUNTS (DEDUCTIONS) : We enter the names of the
accounts you use to track money deducted from your employees e.g. NHIF, NSSF etc
EMPLYER TAX ACCOUNTS: We enter the names of the accounts you use to track money deducted
from the employees and should be expense accounts. E.g. pension

WEEKLY TIMESHEET
What it shows. A weekly timesheet shows the time spent by one person doing any number of activities
for any number of jobs within a seven day period. While the timesheet can only display one week at a
time, you can easily view the hours entered for other weeks.

Why you might use it. If you prefer to enter a person's hours on a single form at regular intervals, this
method might work best for you. For example, a general contractor could use a weekly timesheet to
record the time spent on each job for that week.

When you enter time on the weekly timesheet, you begin by selecting the employee or subcontractor
from the Name list. If the name you want is not listed, you can add it by clicking on the <Add New>
legend. If you are adding a subcontractor, choose the Vendor option.
Next select the Customer:Job that you want the time to be charged to. You must also enter a service item
for the time charged.
Enter time in hours and fractions of hours in the daily columns. Note that the fractions of hours can be
entered either in decimal or in minutes. Go to the General Preferences screen to make your choice. You
can change from one to the other without losing data.
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When you have finished entering time, click on OK to save.
You can always go back and add or change time. Call up the weekly timesheet you are looking for by
selecting the employee or subcontractor name, and then scroll through the timesheets using the Prev
Week and Next Week buttons.

SINGLE ACTIVITY SHEET


What it shows. A single activity entry shows the time spent by one person doing a single activity for a
single job on a single date. If you are recording time spent on different jobs, you would have to make a
separate entry for each job even if all the work was performed by the same person.
Why you might use it. If you prefer to jot down the details of one day's work as the day progresses, this
method might work best for you. For example, a solicitor could use a single activity entry to record the
time he or she just spent on a phone conversation with a client.
You can select this option from the Activities Time Tracking menu. The single activity sheet allows
you to enter a single unit of time for a customer:job. As with the weekly timesheet, you must enter a
service item.
Note: When you save time in QuickBooks, it is stored in a separate part of the system. No accounting
entries are made.

BILLING CLIENTS FOR TIME (SPENT BY EMPLOYEES RENDERING THEM


SERVICES)
To bill clients for time spent:
1. From the Activities menu, choose Create Invoices.
2. Select the customer from the Customer:Job drop-down list.
3. Click the Time/Costs button.
The Time and Costs window displays. There are three tabs to choose from:
Items Select this tab to invoice e.g. items that you have specifically bought for this project
Expenses Select this tab to invoice any billable expenses
Time Click on this to charge for time booked to the project by your employees or
subcontractors
Click the Select All button or select any billable expenses by clicking next to the item, expense or
time in the Use column.
The invoice icon appears beside any item you select.
(Optional) On expenses, if you charge for markup, enter the markup percentage or amount.
Click OK.
4. Click OK to record the invoice.

ENTERING A DEPRECIATION TRANSACTION


1 Display the Chart of Accounts.
2 Double-click the sub account that tracks accumulated depreciation for the asset you're
depreciating.
3 Enter the transaction in the bottom of the register:
Enter the depreciation amount as a decrease in the register.
In the Account field, enter the expense account you set up to track depreciation.
4 Click Record.
WHAT ARE CLASSES
Classes give you a way to break down your income and expenses for the services you perform. For
example, if your store does business in two different locations, you can use classes to track the
proportion of your income and expenses related to those two locations.

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SECTION 4: FINANCIAL REPORTS IN QUICKBOOKS
FINANCIAL REPORTS
These reports show how well your business is doing:
- Profit and loss(STATEMENT OF FINANCIAL PERFORMANCE)
- Balance sheet(STATEMENT OF FINANCIAL POSITION)
- Cash flow forecast

PROFIT AND LOSS REPORT/STATEMENT OF INCOME


This report summarises your income and expenses for the month, so you can tell whether you're
operating at a profit or a loss. The report shows subtotals for each income or expense account in
your chart of accounts. The last line shows your net income (or loss) for the month.

This type of report is also known as an income statement.


To see a list of the transactions that make up an amount, double-click the amount.
To create this report. From the Reports menu, choose Profit and Loss. Then choose Standard.
BALANCE SHEET REPORT/STATEMENT OF FINANCIAL PERFORMANCE
This report provides a financial snapshot of your company as of a specific date. Initially, the
date is today's date, but you can change the date by entering a different date in the As Of field.
The report calculates how much your business is worth by subtracting all the money your
company owes (liabilities) from everything it owns (assets). The result is what your company is
worth: your business's equity. The total for equity includes your company's net income for the
financial year to date.
To create this report. From the Reports menu, choose Balance Sheet. Then choose Standard.
CASH FLOW FORECAST REPORT
This report helps you forecast how much cash you'll have by projecting your cash inflows, cash
disbursements, and bank account balances on a week by week basis. Initially, the report shows
projected cash flow for the next four weeks, but you can change the forecast period by choosing
a different date range from the Dates list.
The Accounts Receivable column shows the customer payments you expect to receive, based on
the payment terms you recorded for each customer. The beginning balance is the amount of
past due customer payments as of the day before the report start date.

The Accounts Payable column shows the bills you expect to pay, based on the payment terms
you recorded for each vendor. The beginning balance is the amount of past due bills as of the
day before the report start date.
The Bank Accounts column shows expected changes to your bank account balances based on
payments and deposits postdated after the report start date. The beginning balance is the sum
of the balances in all your bank accounts as of the day before the report start date.

The Net Inflows column shows your projected net cash inflow for each week. QuickBooks
calculates net inflow from the amounts in the Accounts Receivable, Accounts Payable, and Bank
Accounts columns.
The Projected Balance is the total in all bank accounts is all unpaid invoices and bills were paid
on time.
To see a list of the transactions that make up an amount, double-click the amount.
To create this report. From the Reports menu, choose Other Reports. Then choose Cash Flow
Forecast.

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SECTION 5: PREFENCES MENU

About Budgets
Budgets can be created for either Profit and Loss or Balance Sheet accounts, but they
must be account-based.
A budget can be created from scratch, from actual data from the previous financial year, or
from the previous financial year's budget. A budget is uniquely identified by its financial
year, the account type (either Profit and Loss or Balance Sheet) and if desired, further
identified by Customer:Job or Class. Totals from foreign accounts are shown in the home
currency.

Setting accounting preferences


The QuickBooks Administrator is the only user who can do this.
1. Display the Accounting Preferences window.
2. Click the Company Preferences tab.
3. Change, as needed, these preferences:
Use account numbers
Show lowest subaccount only
Require accounts
Use class tracking
Use audit trail
Automatically assign general journal entry number
Closing date/Set Password
Use multicurrency
Use foreign prices on items
4. Click OK.

Adding users and giving them access

We Privatize QuickBooks Information By Setting Up User Accounts


The QuickBooks Administrator is the only user who can do this.
1. From the Company menu, choose Set Up Users:
2. Click Add User.
You can add an unlimited number of users, but only five can have access at one time.
3. Assign a user name and password:
Enter the name of the person in the User Name field.
(Optional) Enter a password: first in the Password field, then in the Confirm
Password field.
Click Next.
4. Choose whether this person will have access to selected areas of QuickBooks or all
areas of QuickBooks.

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What these choices mean
5. Click Next.
If you granted access to all areas of QuickBooks, you have no more selections
to make. Click Yes to confirm that you want this person to have full access. Then
click Finish to complete the setup process.
6. If you are selecting the areas the user has access to, make your selections on each
screen that appears. Click Next to go to the next screen.
What the choices mean
7. When the Changing and Deleting Transactions screen appears, respond Yes to the
first question if you want the user to be able to edit and delete transactions in addition
to creating them. Also indicate whether you want the user to have access to
transactions from prior accounting periods.
What your responses mean
8. When the last screen appears, review the table that summarises the access rights
you granted. If you need to make a change, click Prev to return to the appropriate
screen.
9. Click Finish to complete the setup process.
Backing up your data
You must be in single-user mode to do this.
Back up your QuickBooks company files daily. Backup copies are important insuranceif
you should lose data for any reason, you can restore data from your backup copy.
You can choose to back up manually, have QuickBooks back up your data file when you
close it with no prompting from you, or automate your backup routine using the Online
Backup service (for more information, click 'Tell Me More' in the QuickBooks Backup
window), or schedule regular backups to local media.
Which should I choose?
1. If you choose to back up locally, select the storage media on which you will back up
your QuickBooks company. Common choices are 3.5 inch diskette, Zip disk, CD-ROM
or tape.
If you are backing up to a 3.5-inch disk, put the disk in a disk drive.
2. From the File menu, choose Back Up and make sure the Back Up Company File tab
is selected.
3. (Optional) If you want to change the name or location that QuickBooks suggests for
the backup file, enter your changes in the Filename and Location fields. If necessary,
click Browse to browse to the new location.
4. (Optional) Set backup defaults. Click Set Defaults and specify the desired defaults for
your manual backups.
5. (Optional) Select backup options. Click Verify data integrity to verify your data before
backing up. If you've selected to back up to floppy disks, select Format each floppy disk
during backup to format the disks as you back up, instead of before.
If the disk needs to be formatted prior to backup, do not choose Quick Format. Instead,
we recommend that you fully format your disk.
Caution: Even if the disk is labeled as preformatted, it's a good idea to fully format a
new disk before using it. Sometimes new disks can be stripped of their formatting
during shipping.
6. Click OK.

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If you need more than one disk: QuickBooks asks you to insert an additional disk as each
disk fills up. Be sure to label the disks so that you'll know which one was first, which was
second, and so on. This will help you if you ever need to restore the data from the disks.

What the backup command does


The QuickBooks Backup command does not simply copy the data for your QuickBooks
company. Instead, it compresses the data into a compact file that is smaller than your
company file. To open a backup file, choose Restore from the File menu.

About Budgets
Budgets can be created for either Profit and Loss or Balance Sheet accounts, but they
must be account-based.
A budget can be created from scratch, from actual data from the previous financial year, or
from the previous financial year's budget. A budget is uniquely identified by its financial
year, the account type (either Profit and Loss or Balance Sheet) and if desired, further
identified by Customer:Job or Class. Totals from foreign accounts are shown in the home
currency.

Creating a budget
You can create budgets for either Profit and Loss accounts or Balance Sheet accounts by
fiscal year. Foreign account totals are shown in the home currency.
All budgets must be account-based.
1. From the Company menu, choose Planning and Budgeting, then Set Up Budgets.
Note. If a budget currently exists, the most recent budget will be displayed in the Set
Up Budgets window.
How do I modify an existing budget?
2. Click Create New Budget.
3. In the Create New Budget window, choose the fiscal year for the new budget, then
choose Profit and Loss (income and expense) or Balance Sheet accounts.
4. If you choose Profit and Loss, you can specify additional criteria of either
Customer:Job or Class, if class tracking has been turned on.
How do I turn class tracking on?
5. Choose whether you want to create the budget from scratch or from previous year's
actual data.
What's the difference?
6. Click Finish to create the new budget.

Memorising a transaction
Why memorise?
About memorizing
If you have transactions that occur often, such as monthly bills or recurring invoices for
clients, you can save time by memorising the details of the transactions. Once you
memorise a transaction, you can have QuickBooks re-enter it for you at any time. You can
even have QuickBooks automatically enter the transaction at intervals you specify.

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Restrictions
You cannot memorise the following transactions:
Receipt or deposit of payments
Bill payments
Payroll payments
Time records
VAT payments
YTD payroll adjustments

1. Enter the transaction as you'd like it memorised.


Tip: If the content of certain fields will change each time you recall the transaction,
leave those fields blank. For example, you might want to leave the amount field blank
on your monthly utility bill. That way, you can fill in the amount each time you recall the
bill.
2. From the Edit menu, choose Memorise.
3. Enter a name that will help you recognise the transaction on the Memorised
Transaction list.
4. Choose how you want QuickBooks to treat the transaction.
What the choices mean

Memorise transaction options


Click... To do this

Remind me Add the transaction to your Reminders list.


Be sure to enter how often you want the reminder to occur and the next
date when the transaction is due.

Don't remind Omit the transaction from your Reminders list.


me

Automatically Have QuickBooks automatically enter the transaction for you.


enter Be sure to enter how often you want QuickBooks to enter the transaction
and the next date the transaction is due. You can also specify how many
times you want QuickBooks to enter the transaction ("Number remaining").

With Add the transaction to a group.


Transactions Be sure to enter the name of the group (such as "Monthly bills").
in Group

5. Click OK to memorise the transaction.


6. If all you are doing is entering the transaction information for future use, click Cancel
to close the transaction window.
REMINDERS
You can have QuickBooks remind you when it's time to pay bills, print forms such as invoices and
purchase orders, print cheques, deposit money in the bank, enter memorised transactions, act on
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overdue invoices, or act on your personal To Do notes. Each reminder you set up appears on the
Reminders window.
Reminders can also post messages about any QuickBooks business services that need
your attention, and important Alerts.
Displaying the Reminders list
When you set up reminders in Preferences, you decide when QuickBooks displays the
Reminders list. You can also display the Reminders list by choosing Reminders from the
Company menu.

Creating To Do notes
Remind yourself of tasks you want to complete by a certain date. In the To Do list you can
look at your notes at any time, or you can use the Reminders list to see the notes whose
dates are due.
1. From the Company menu, choose To Do List.
2. Select New from the To Do menu button.
3. Type the note as you want it to appear on the To Do list.
Tip: If you have a lot of detail to put into the note but you want the entry in the To Do
List to be short, enter a short title, press ENTER, and then enter the rest of the note.
Only the title will appear on the To Do list.
4. In the 'Remind me on' field, enter the date you want the note to appear on your
Reminders list.
For example, if you enter 15th May, the note will not appear on the list until 15th May.
5. Click OK.

Depreciation
When you purchase an asset that will be used in your business for more than one year, you
typically spread its cost over the useful life of the asset. But because fixed assets wear out
or become obsolete, their value declines constantly from the day they are purchased. The
amount of this decline in value is called depreciation.
To determine the value of a fixed asset at any point in time, you subtract its accumulated
depreciation from its original cost.
Example
You bought a company car in January 1998 for 13,000.
By January 2000, the car has depreciated by 40% of its original value (5,200).
The value of the car in January 2000 is:

Original cost 13,000

Accumulated depreciation - 5,200

Current value 7,800

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Entering a depreciation transaction
Important: Determining the amount of depreciation to deduct, or capital cost allowance
(CCA) can be a complex process, and Kenya Revenue Authority rules on the subject
change often. Ask an accountant for help in figuring actual CCA amounts.
1. From the Lists menu, choose Chart of Accounts.
2. Double-click the subaccount that tracks accumulated depreciation for the asset
you're depreciating.
3. Enter the transaction in the bottom of the register:
Enter the depreciation amount as a decrease in the register.
In the Account field, enter the expense account you set up to track
depreciation.
4. Click Record.

NB:From Premier 2007 edition, we use the journal to charge depreciation

Effect on your accounts


In the asset's fixed asset account, QuickBooks subtracts the depreciation amount from the
current value of the asset.
In the account that tracks depreciation, QuickBooks enters the depreciation amount as an
increase to your company's depreciation expense.
Writing off a bad debt
Create a General Journal entry to write off the bad debt and mark the invoice as no longer
receivable.
1. From the Banking menu, choose Make Journal Entry.
2. Enter the date. This date must be at least six months later than the transaction associated
with the bad debt.
3. Enter 'Bad Debt' in the Entry No. field.
4. Select Accounts Receivable from the Account drop-down list as this was the account that the
invoice was originally posted to.
5. Enter the GROSS amount of the bad debt in the Credit field.
6. Leave the VAT fields blank.
7. (Optional) Enter 'Bad Debt' in the Memo field.
8. Select the customer from the Name drop-down list.
9. In the next row, choose the 'Bad Debt' expense account from the Account drop-down list. If
this account does not exist, create it by selecting < Add New >.
10. The Debit column is automatically filled in by QuickBooks. This amount must be changed to
the NET amount of the first Item that appears on your bad debt invoice.
11. Choose the correct VAT code for the Item.
12. Make sure that the VAT amount automatically calculated by QuickBooks is the same as the
VAT amount for that item on the invoice.
13. Select the Input (Purchase) radio button at the top of the General Journal Entry window.
14. Repeat steps 9 through 12 for each Item on the invoice being written off as bad debt.
15. Click Save & Close.
Notes:
If multicurrency is turned on and the bad debt is from a foreign customer, make sure that the
NET and VAT amounts agree exactly with your invoice.
If you are tracking stock, you do not need to make any stock adjustments.

NB:From Premier 2007 edition, we use the journal to write off bad debts

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BANK ACCOUNTS
Set up and set the preferences for your bank accounts from the chart of accounts

Transferring funds between income and expense accounts and/ or bank accounts
Transfer money between income and expense accounts if you've recently divided an
account into one or more subaccounts, if you're correcting an error, or if you're making an
adjustment.
1. From the Banking menu, choose Make Journal Entry.
2. From the Account column drop-down list, select the income or expense account
that's involved in the transfer.
All income and expense accounts appear toward the bottom of the list.
3. Type the debit or credit amount you want to transfer.
4. Click the Account column below your first entry and select the other income or
expense account that's involved in the transfer.
QuickBooks automatically displays a single balancing amount, but you can split the
transfer among several accounts.
5. Save the transfer.

The End.

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