Setting Up QuickBooks

What you need to know as you set up your QuickBooks for the first time. First, we will look at the following:

1. What accounting does
2. What accounting System does
3. What Quickbooks does

What accounting does

Many people agree that accounting does the following four important things:

• Measures profits and losses

• Reports on the financial condition of a firm (its assets, liabilities, and net worth)

• Provides detailed records of the assets, liabilities, and owner’s equity accounts

• Supplies financial information to stakeholders, especially to management

What accounting systems do

• Accounting system whether for small business or big business (profit entity or non-profit) typically do the following:

• Produce financial statements, including income statements, balance sheets, and other accounting reports.

• Generate business forms, including checks, pay-checks, invoices, customer statements, and so forth.

• Keep detailed records of key accounts, including cash, accounts receivable (amounts that customers owe a firm), accounts payable (amounts that a firm owes its vendors), inventory items, fixed assets, and so on.

• Perform specialized information management functions. For example, if the firm has a loan with the bank, and is making monthly payments to offset the loan, the accounting system must show the monthly amount that is principal repayment and the amount that is interest payment. So loan repayment accounting is a task that your accounting systems typically must do.

What QuickBooks does

Now that you understand what accounting does and what accounting systems typically do, you can see with some perspective what QuickBooks does:

• Produces financial statements

• Generates many common business forms, including checks, paychecks, customer invoices, customer statements, credit memos, and purchase orders, etc.

• Keeps detailed records of a handful of key accounts: cash, accounts receivable, accounts payable, and inventory in simple settings

QuickBooks does three of the four things that you would expect an accounting system to do. The forth on the list (i.e. to perform ‘specialise information management functions like the example mentioned above) you can do with a bit of training Using QuickBooks. With the right kind of training you should be able to figure out workarounds for some of your special accounting requirements. Each organisation or frim is different and as they grow or their operations expand specialise accounting functions using the same system is required.

Scenario:

Say you are the financial controller for a large hospital. For the most part your doctors are employees of your firm. But as you grow you discover the need for specialise services to be rendered to your hospital by doctors from other hospitals. These doctors will come in two or three times a week and see patients at your hospital. At the end of the month you would like to know how many patients were seen by each non-staff doctor and the payment to be made to their individual hospitals. (setting up a system that lets you generate the following information at the click of a mouse is a specialise accounting function)

Installing QuickBooks

You install QuickBooks the same way that you install any application programs on your computer. The QuickBooks installation process may ask you to answer questions about how you want QuickBooks to be installed. Almost always, you would accept the default suggestions.

After you install QuickBooks, you run an onscreen wizard to set up QuickBooks for your firm’s accounting. When running QuickBooks Setup, you will provide quite a bit of information. You may need to have the following before you start:

• Accurate financial statements as of the conversion-to-QuickBooks date

• Detailed records of your accounts payable, accounts receivable, inventory, and fixed assets

• A complete or nearly complete list of employees, customers, vendors, and inventory items (if you buy and sell inventory)

You want to get all this together before you start the Setup process because you may be asked to enter some of them during the process. If you have them at the ready, then you will not be scurrying around looking for a particular piece of data while running the setup wizard.

But not to worry! The beauty with QuickBooks is that you can skip some of the Setup process and continue to work with the information you have on hand. At such time when the missing information is ready you can then go back and enter them.

For example: say you have just started a new financial year. You have decided to switch to QuickBooks accounting package and you have started the installation process. Some of the balances the system is asking you for will not be ready until the previous financial year audit report is finalised. You can skip entering these balances and still go on to use Quickbooks for all your accounting functions (preparing invoice, receipts, sales, bank transactions, payroll, etc.) until the audit report is finalised. At this point you would enter the data you have been waiting for. Once this is completed your records will be up to date. Giving you a clearer picture as of the current position of your firm.

As you walk through the setup process, you will also set QuickBooks preferences the chart of accounts and your bank accounts.

The chart of accounts, just so you know, identifies those income, expense, asset, liability, and owner’s equity accounts that appear on your financial statements.

After you complete the QuickBooks Setup, you’re almost ready to begin using QuickBooks. At this point you will identify your starting trial balance and input your master files.

The trial balance identifies your year-to-date income and expense figures, and your asset, liability, and owner’s equity figures as of the changeover date.

The master files store information about customers, vendors, employees, and inventory items that you repeatedly use. For example, the customer master file stores a customer’s name and address, phone number, and the contact person’s name (if different).

After you finish the following: supplying company information, setting your start date, adding your information to the company file, you are all set and ready to go.