Chapter 1 Weclome to QuickBooks...1 Who should use this guide?... 1 The sample companies...2

Transcription

1 Contents Chapter 1 Weclome to QuickBooks...1 Who should use this guide?... 1 The sample companies...2 Chapter 2 QuickBooks Essentials...3 The QuickBooks versions... 3 Premier flavours...5 Managing clients on different versions...5 Toggling between the different versions of QuickBooks... 6 A basic understanding of multi-user QuickBooks... 6 Two multi-user options...6 Network hosting...7 Dedicated server set-up...7 Installing QuickBooks in a multi-user environment...8 Suggestions for a dedicated server setup...10 How to configure the Database Manager...10 Setting up the Server for Maintenance Releases...11 Slow multi-user performance...12 QuickBooks file types...13 Multi-year reporting and data security...14 Multiple periods and the impact on retained earnings...16 Preventing unauthorized access to prior periods...16 Closing periods...16 Establishing user permissions...17 Setting up users in QuickBooks Enterprise Solutions...22 Chapter summary Chapter 3 Setting Up a QuickBooks Company File Setting up a client file Using a questionnaire Creating a QuickBooks file Establishing a start date Setting up lists The chart of accounts The customer list...33 The vendor list...34 The item list...34 Sales tax codes...35 Shortcut for working with lists...36 Importing other lists...40 Setting preferences...40 Opening balances...41 i

2 Option 1: using the opening balance fields...42 Option 2: using journal entries to record opening balances...48 Reconciling the opening bank balance...53 Creating a file template...55 Spotting common client setup errors...56 Incorrect dates or amounts...56 Removing or hiding unnecessary accounts...57 Merging duplicate accounts...59 Changing an account s type Chapter summary Chapter 4 Processing Tips, Tricks, and Traps Spotting sales tax errors Sales taxes a primer A closer look at sales tax codes Setting up a new provincial tax Creating an industry-specific tax Setting up a sales tax group...71 Overview of uncategorized taxes Other causes of uncategorized sales tax Correcting uncategorized transactions Making sales tax adjustments...76 Preventing uncategorized taxes Filing a sales tax return What if there s a sales tax refund? Making other tax adjustments Accounts receivable errors Undeposited funds Open invoices Accounts payable errors Open bills Double-counted expenses Clearing contra accounts Voiding transactions Voiding transactions in the current period Voiding transactions in a closed period Working with journal entries Features of the journal entry window Common journal entry errors Journal entries and payroll Journal entries and inventory Bank reconciliation errors Deleting reconciled transactions Finding information Simple find Advanced find Google desktop ii

3 Chapter summary Chapter 5 Working with Reports Report types Summary reports Transaction reports List reports Using the Report Centre Changing the scope and layout of reports Modifying reports The Display Tab The Filters tab Header/Footer tab The Fonts & Numbers tab Making quick changes to a report Using QuickZoom Memorizing and managing reports Using memorized reports Preparing report batches Creating report templates Importing a report template Exporting reports to Microsoft Excel Auto outline Auto filtering The financial statement designer Using the financial statement designer Using the financial statement editor QuickZoom from account balances Insert rows and enter formulas Group accounts Insert columns and enter formulas Insert cells and enter formulas Filter by class or customer:job Round statements Accessing financial ratios Using the Supporting Documents editor Standard letters Updating title pages and letters Inserting company information Creating a supporting document from scratch The account register The customer register Chapter summary Chapter 6 Workarounds and add-ons Recognizing the need for a workaround What s a workaround? iii

4 Using QuickBooks features as workarounds Custom Fields Customer & Vendor type lists Underutilized Lists Sales tax items, groups and codes Other sales tax workarounds Multicurrency Lite Workaround Making Sales Taxes Work for You Using forms for special adjustments Using items in workarounds Reports Using third-party applications Navigating the Intuit Marketplace Other add-on resources Supporting your clients via remote access Chapter summary Chapter 7 QuickBooks at year end The Accountant s Copy The dividing date Creating an accountant s copy Converting the Accountant s Copy Exporting and sending changes to the client Importing the accountant s changes Making and reviewing adjusting journal entries Working with the Audit Trail Other ways of finding changed information The Voided/Deleted reports The Closing Date Exception report Working with Caseware Method 1 The CaseWare Export Utility Method 2 Using Excel Working with ProFile Exporting to ProFile Chapter summary Chapter 8 Housekeeping Verify and rebuild Verify data Rebuild data The QBWIN.LOG File Safeguarding company files What s the best way to back up files? The portable copy Managing large files Chapter summary iv

5 Chapter 9 Summary and wrap-up In-product help The ProAdvisor program Support Centre Online communities QuickBooks training Professional tax software Experience is the best teacher Appendix A QuickBooks Questionnaire Appendix B QuickBooks and multicurrency Enabling multicurrency Setting up foreign currency customers Selling in a foreign currency How does QuickBooks calculate the item s rate or selling price? Using foreign prices on invoices Depositing a foreign payment to a Canadian bank account Setting up foreign currency vendors Recording a foreign purchase Where does QuickBooks get the cost? The A/P Aging Summary report Paying a foreign vendor Multicurrency bank accounts Making deposits or paying bills from a foreign bank account Transferring funds between Canadian and foreign currency accounts Multicurrency at period end Unrealized Gain & Loss report v

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7 Welcome to QuickBooks! QuickBooks is easy-to-use accounting software designed for your small to medium sized business clients. With QuickBooks, your clients have access to a multifaceted tool that records sales, tracks expenses, keeps tabs on inventory, prepares payroll cheques, and reports on all aspects of their business operations. And, when your clients use QuickBooks, you automatically have access to built-in features that let you facilitate dedicated period-end tasks and let you easily provide ongoing support. Examples of these features include: always-on audit trail that highlights deleted or edited transactions accountant-only menus for posting, tracking and reversing year-end adjusting journal entries file export routines that send financial information to write-up and taxpreparation applications remote access that allows you to view client files from your office file-sharing capability for simultaneous data processing Who should use this guide? This training guide is a reference and support resource specifically designed for the QuickBooks Experts Course, a full-day training session for accountants, bookkeepers and financial or information technology professionals who support their QuickBooks clients. The overriding course objective is to provide you, the accounting or IT professional, with time-saving and labour-saving processes that facilitate your involvement with your clients QuickBooks files. 1

8 More specifically, with this guide and during the training course you ll learn how to: understand the key design features of QuickBooks recognize the embedded implications of version numbers, file types and fiscal year-ends identify and solve common client setup and processing errors quickly and easily create a standard, uniform data file for all new QuickBooks clients understand the various means for obtaining a client s QuickBooks file customize, share and save reports and report templates export financial information for year-end processing use workarounds, tips and tricks for efficient data processing navigate the Intuit Marketplace for the perfect add-on product. In short, each chapter of this training guide introduces a specific area, discusses why it s important, and illustrates how to deal with it in QuickBooks. Note: This guide will not tell you how to install QuickBooks or how to send an invoice, reconcile a bank account, create a budget, or issue payroll. For help with these tasks, consider attending the Basic, Advanced or Payroll training courses. The sample companies It is highly recommended that you reproduce, on an actual file, the processes illustrated in this training guide. Although you have the option of creating a company file that duplicates the information in this manual, you might instead want to use one of the many sample companies that QuickBooks created when you installed your version of the software. Any one of the sample companies was specifically created to be used as a practice file while you learn QuickBooks. Note: All examples explained and illustrated in this manual were produced with the 2009 version of QuickBooks Premier Accountant Edition. Any attempt to reproduce these examples with a pre-2009 version of the software or with a lesser edition (for example QuickBooks Pro) may prove unsuccessful. Chapter summary This introductory chapter presented an overview of the Experts Course and defined its scope and intended audience. 2

9 In Canada, your clients have access to many versions of QuickBooks. To facilitate your involvement with the various versions your clients use, it is important for you to understand the differences among the various versions. It is crucial, too, for you to be familiar with the data file essentials shared by all versions of QuickBooks. Finally, because of an increase in the number of clients who share QuickBooks files over a network, it s important to obtain a basic understanding of a multi-user environment. In this chapter, you will learn: the capabilities of the various versions of QuickBooks to toggle between the various editions of QuickBooks how QuickBooks works in a multi-user environment to recognize the different types of QuickBooks files how QuickBooks handles multiple fiscal years to maintain data integrity The QuickBooks versions QuickBooks is available in five key product versions, ranging from the entry level Easy Start to the top-range Enterprise Solutions. The chart, below, highlights the major feature sets of each version. For a more detailed look into each product s key features, visit the following website: 3

10 Track sales and create basic reports Always on audit trail See your business at a glance from the home page Includes accounts payable, inventory and payroll Multi-user capabilities List capacity (for lists and names) Merge accountant s changes into company file Protect data with usernames and permissions Forecast sales and expenses Use industryspecific tools Create sales orders Advanced inventory capabilities Up to 5 users Up to 5 users Up to 20 users 14,500 list items Up to 10 permission areas 14,500 list items Up to 10 permission areas Up to 1 million list items Over 100 areas and activities 4

11 Auto-reverse journal entries Combine reports from multiple files Run database server on Linux Includes TrueCommerce EDI Premier flavours In addition to a general QuickBooks Premier Edition, there are six industry-specific editions of QuickBooks Premier. The table below summarizes each available edition or flavour. Managing clients on different versions Of interest to the accounting professional is QuickBooks ability to read and open files created by other versions of QuickBooks. For example, a QuickBooks Consultant using the Premier Accountant Edition can open the following editions without a data file conversion: Easy Start Pro 5

12 Other Premier editions Toggling between the different versions of QuickBooks The Premier Accountant Edition not only opens a company file from any version of QuickBooks, it also offers the ability to mimic your client s view of the file. This feature, called toggling, lets you experience the look and feel of each QuickBooks version. 1. To view a different version, click the File menu, select Toggle to Another Edition and choose the desired version. 2. A quick glance at the title bar confirms the edition you are using on a client s company file. A basic understanding of multi-user QuickBooks Both the Basic and Advanced training courses provide guidance and insight into the requirements and procedures for a multi-user installation. This section offers a brief overview of a multi-user setup. Two multi-user options When you install QuickBooks in a multi-user environment, you choose from one of two options: network hosting or dedicated server set-up. 6

13 Network hosting To run QuickBooks in a network hosting environment, you must have Windows 2000, XP or Microsoft Vista installed. In a network hosting environment, each computer has its own copy of QuickBooks installed; however, the QuickBooks company file is located on only one computer, which must be turned on and available on the network. Networks set up for hosting files do not use a dedicated file server, so a single, dedicated computer is not required to share files. Thus all the networked computers have the option to share their resources. For example, a client might run a small business by using QuickBooks on two computers. In this case, you still need to set up a simple network to share your company file. Note: Windows XP users must have at least Standard user rights and Windows 2000 users must have Power Users Group rights to be able to run QuickBooks. Dedicated server set-up To run QuickBooks in a network environment with a dedicated server, your client must have Windows 2000, Windows 2000 Server, Windows 2003 Server, Windows CP Professional, Windows XP Home Edition (not recommended) or Microsoft Vista. Networks with a dedicated server have at least one computer (the server) dedicated to sharing files, printers or other resources. You should store your company file on the server. 7

14 Installing QuickBooks in a multi-user environment In order to share a company file, you will have to install QuickBooks company file server on the host computer the host computer is the one that stores, or hosts, the company file. 1. When you install QuickBooks on the host computer, follow the step-by-step instructions until the following window is displayed. To share the company file with other users, click More Than One Computer, then click Next. 2. QuickBooks asks what type of installation you require. You choices are: 8 Install QuickBooks with Company File Server: Also called network hosting set-up, select this option if the computer upon which the company file resides is also used to run QuickBooks. Install QuickBooks Only: Select this option to install QuickBooks only. This

15 option is used if this computer will not host any company files. Install QuickBooks Company File Server Only: Also called dedicated server set-up, select this option if you intend to install a company file on a central computer (the server) that is only used for file sharing. In other words, no user will use this central computer or server to work in QuickBooks. 3. Follow through the rest of installation process (not illustrated here) until QuickBooks advises that the installation process is complete. Click Finish to close the window. 9

16 Suggestions for a dedicated server setup When you prepare QuickBooks for a client-server setup, consider the following: For servers: install the QuickBooks company file server on the network ensure that the data file is hosted on the server verify that the accessibility of a shared data folder is restricted to authorized users ensure that only the server hosts multi-user access For each client computer requiring access to the company file: install QuickBooks on each client open the data file on the server ensure that client computers are not hosting multi-user access An application called the Database Manager should be running once QuickBooks is installed in a multi-user environment. 1. To verify that the server is running the Database Manager, open the Control Panel, select Administrative Tools and choose Services. Scroll through the list to find QuickBooksDB18 (or similar) and note its status it should read Started. How to configure the Database Manager If difficulties exist, verify that the QuickBooks Database Server is properly configured. 1. Click the Windows Start Menu, select Programs and find the QuickBooks folder. Click QuickBooks Database Server Manager. 10

17 2. When the dialog box opens, click the Scan Folders tab. In this tab, check that all folders containing company files are listed and then scans those folders. The QuickBooks Database Server Manager will control all communications with files in the scanned folders though a file with the extension.nd. For every company file (.QBW) that exists, QuickBooks creates a (.ND) file. If a client experiences difficulty opening a QuickBooks company file, scan the folder to ensure that the company file is listed. The Monitored Drives and Database Server tabs of the QuickBooks Database Server Manager provide information about the drives to be monitored, their location (IP address) on the network and operating status of the database server. The Updates tab provides the version of the QuickBooks Database Server Manager with instructions on how to check for and install any updates. Setting up the Server for Maintenance Releases In a multi-user environment, it is critical that all users run the same QuickBooks version and update release. QuickBooks simplifies the update task by distributing all releases from the server to each user. 1. To automate this distribution, open QuickBooks, click Help > Update QuickBooks > Options. 2. Click Yes for Shared Download, then click Save and close the window. 11

18 With the updates configured as in the above diagram, every QuickBooks user, upon opening a company file, will receive notification when an update is available. Tip: You can also manually download updates by visiting and downloading an executable file. Slow multi-user performance A common complaint in a multi-user environment is slow network performance. This degradation is often caused by improper server set-up, a network client that opens the data file and switches to multi-user mode or a user who hosts multi-user access on a nonhosted computer. To resolve the latter issue, deactivate multi-user hosting on each client computer in the network. 1. Select File > Utilities > Stop Hosting Multi-User Access, as illustrated in the diagram below. 12

19 Tip: Additional information on networking in QuickBooks can be obtained from - Store/PDFs/Networking/QB07NetInstall.pdf QuickBooks file types This table describes the purpose of each file type used by QuickBooks. Extension File type Description.QBW.QBB.QBM.QBA.QBX QuickBooks for Windows company file QuickBooks backup file QuickBooks portable company file Accountant s Copy working file Accountant s Copy (export file) When you create a company file, QuickBooks saves the file with a.qbw extension. For example, if you enter MyBusiness as the company name, QuickBooks saves the file as MyBusiness.QBW. When you back up your company file, QuickBooks saves the backup file with a.qbb extension. To open a.qbb file, go to the File menu and click Restore. When you want to or move a company file, QuickBooks creates a compressed version of the company file with a.qbm extension. When you export your QuickBooks data for your accountant to review, the accountant restores the export file on his or her computer as a file with a.qba extension. When you export your QuickBooks data for your accountant to review, QuickBooks creates an Accountant's Copy with a.qbx extension. 13

20 Extension File type Description.QBY.QBW.TLG.QBA.TLG.ND.IIF Accountant s Copy (import file) Transaction log file (for QuickBooks company file) Transaction log file (for Accountant s copy) QuickBooks Network Data File Intuit Interchange Format file When your accountant is finished making changes in an Accountant's Copy, he or she provides you with a.qby file to be imported into your company file. When you back up your company file, QuickBooks starts a log of transactions that you've entered since the last time you backed up. In case of accidental loss of data, Intuit Technical Support can use your most recent backup in conjunction with the transaction log file to recover your data. When you back up an Accountant's Copy, QuickBooks starts a log of transactions that you've entered since the last time you backed up. In case of accidental loss of data, Intuit Technical Support can use your most recent backup in conjunction with the transaction log file to recover your data. A configuration file that allows access to the QuickBooks company file. Do not delete this configuration file. You can import and export lists and/or transactions using text files with an.iif extension. Multi-year reporting and data security Unlike other accounting software, QuickBooks does not require you to run a fiscal yearend routine. At every fiscal year-end, users continue to enter data into the same company file that was created in the initial fiscal year. The overriding benefit of having all fiscal years in one file is the capability for multi-year reporting. 14

21 The income statement above not only lists financial data for three consecutive years, but also allows the user to zoom in and obtain more detail on any amount from any fiscal year. Not only does QuickBooks allow for multi-year comparisons it also accommodates intrayear reporting. In the example above, an income statement is displayed for three subsequent fiscal years. Review the example below and note that QuickBooks is able to display an income statement for a reporting period that spans a fiscal year. 15

22 Multiple periods and the impact on retained earnings Most accounting software programs require a year-end routine that closes out the income statement and permanently transfers the closed year's revenue and expenses to retained earnings. QuickBooks does not. Although it automatically calculates all prior years' net income or loss and allocates it to retained earnings, it does not zero out the revenue and expenses for a closed fiscal year. 1. To view the retained earnings account, double-click it from any report that displays it typically the balance sheet or, alternatively, double-click it from the chart of accounts window. Preventing unauthorized access to prior periods The inherent multi-year flexibility and reporting power presents a potential problem. Without proper controls, prior period results could be changed, with damaging results. Closing periods To prevent unauthorized access to recorded information, the QuickBooks Administrator can set a closing date and a closing date password. 1. Click the Company menu, and select Set Up Users > Closing Date. 16

23 2. Choose the closing date and enter a closing date password that is unique and different from any existing user password. Click OK to close the window. 3. With a closing date, only the QuickBooks Administrator and other authorized users are able to work with transactions in a closed period. When the administrator or an authorized user enters or changes transactions in a closed period, QuickBooks asks for the closing date password. 4. After the user enters the password, QuickBooks allows a transaction to be recorded. Establishing user permissions To further prevent unauthorized access to recorded transactions, you can assign a user name and password to every individual accessing the company file. 1. Click the Company menu and select Set up Users. 17

24 2. If no password exists for the administrator, select Edit User. 3. Record and confirm an Administrator password. Click Next. 18

25 4. After you review the administrator s rights, click Finish to close the dialog box. 5. To setup a new user, select Add User from the User List. When QuickBooks displays the Set up user password dialog box, enter the new user s name then create and confirm their password. In the following windows, QuickBooks asks for access permissions to key areas. For example, you select whether to allow this user access to all areas of QuickBooks or only 19

26 selected areas. If you click Selected areas of QuickBooks, you will be directed through a series of dialog boxes in which you determine that user s access rights. The first window in the series queries you on Sales and Accounts Receivable. Review the choices below. If you select Selective Access to sales and accounts receivable, you then have to choose whether Jennifer can: only create transactions create and print transaction create transactions and reports The last screen displays a summary of the user s access rights. 20

27 Note the last two items in the table. As illustrated in the window below, the administrator is able to prevent each user from changing or deleting data in either a closed period or a current period. If a user is denied permission to post to a closed period, and attempts to do so, QuickBooks displays a warning effectively preventing the user from adding, deleting, or editing transactions dated before the closing date. 21

28 Tip: Consider discussing with clients the implications of changing transactions from prior periods and explain the purpose of a closing date password. Also discuss the importance of setting a closing date password to prevent changes to monthly bank reconciliations, quarterly GST returns and after any period-end reporting. Setting up users in QuickBooks Enterprise Solutions QuickBooks flagship Enterprise Solutions (QBES) product is designed for companies that have outgrown the Pro or Premier Editions of QuickBooks. Because QBES accommodates up to twenty users, the user set-up options are more powerful, allowing more security and flexibility for each individual user. 1. To set up users in QuickBooks Enterprise Solutions, click Company > Users > Set-up Users and Roles. There are 14 predefined roles providing varying levels of access to the data file. Roles can be edited and duplicated as a means to provide more options for data security. 2. In the Edit Role window, a fully-coloured circle for each area and activity indicates full access to that area. A circle devoid of color implies no access and a semi-coloured circle means limited access. 22

29 Note that, for each area, the administrator sets a corresponding activity access level. The combined areas and activities, along with the associated activity access level, means that an administrator is capable of managing over 100 user permissions.. 23

30 Chapter summary This chapter provided an overview of the essential concepts you should understand when you work with a QuickBooks client. In addition, this chapter discussed: the available versions of QuickBooks a multi-user environment QuickBooks file types multi-year reporting user set-up 24

31 In most cases, accounting professionals either set up a data file for their clients or are asked to review a file that the client set up. This chapter focuses on the key areas to address when setting up or verifying a new company file. In this chapter, you will learn: how to use a QuickBooks questionnaire that standardizes and facilitates the setup process the common key steps for successfully creating a company file how to import and export lists to speed up the setup process how to work with a standard design template how to determine an efficient method for recording opening balances how to spot problem areas when reviewing a client s setup 25

32 Setting up a client file No matter the client, the following standard steps are required for creating a company file: use a questionnaire to obtain required information create a QuickBooks file establish a start date set up lists enable preferences enter opening balances The sections that follow illustrate each of these steps. Using a questionnaire All clients have individual requirements and objectives. When you set up a client s file, it is important to identify, beforehand, how they ll use QuickBooks and what functionality they require. This is especially important when determining the version of QuickBooks to recommend. As illustrated in Chapter 2, sales orders, multicurrency or the number of users (especially if greater than five) all have an impact on the version of QuickBooks to implement. For a helpful guide in determining a client s requirements, review the questionnaire in Appendix A. Creating a QuickBooks file 1. With QuickBooks running, click the File menu and select New Company. 26

33 2. At the first screen, click Skip Interview. 3. Enter the company contact information and click Next. 27

34 4. Indicate the company s status and click Next. 5. Select the fiscal period start and click Next 28

35 6. Select the industry type and click Next. 7. When prompted to create the file, click Finish. 29

36 8. Select a folder location and review the filename as determined by QuickBooks. Click Save. You have successfully created a client s company file. Establishing a start date The start date is the point at which your client begins to record transactions in QuickBooks. If you set up a company file on the day a new business begins operating then that day is the start date. However, in most cases, you will set up a company file for a business that is switching from another accounting system. To help choose the start date for that business, consider the following: When does the company s fiscal year start and how close is today to the start of the fiscal year? Is there an accurate balance sheet and income statement for the prior fiscal period? Is the client willing to record transactions from the first day of the fiscal year to today? How many transactions occur during a typical month? Opening balances are another key determination in choosing a start date. If you set up a client s file in mid-year, you will have to input opening balances for both balance sheet and income statement accounts. However, if you set up a file at the end of a fiscal year, you will only input openings balances for the balance sheet accounts. 30

37 Setting up lists You create lists so your clients won t have to repeatedly type the same information. Lists also link transactions to the chart of accounts, to tax reports, and to the receivable and payable sub-ledgers. To ensure that these reports display accurate information, it s crucial to properly set up all lists. This section describes the five QuickBooks lists you must set up. The chart of accounts 1. From the Lists menu, select Chart of Accounts. The accounts listed in this window are set up based on the industry type you selected when you created the company file. Note that each account is associated with a Type. In QuickBooks, it s the account type that determines where the account appears (Balance Sheet or Profit & Loss statement) and it s the type of account that links forms with the general ledger. For example, QuickBooks knows to link Accounts Receivable accounts with sales invoices and customer payment forms. The available account types include: Income Expense 31

38 Fixed Asset Bank Credit Card Equity Accounts Receivable Other Current Asset Accounts Payable Other Current Liability Long Term Liability Cost of Goods Sold Other Income Other Expense Note that some accounts on the chart of accounts list (above) show an amount under Balance Total. This denotes the existence of an account register (as illustrated below) that tracks all debits, credits and running balances for a specific account. Registers only exist for balance sheet accounts with the exception that no register exists for the retained earnings account. Review the Chart of Accounts window once more. At the bottom of the list are three buttons (most lists have these three buttons). The graphic below explains the purpose and use of each button. 32

39 The first button (which always carries the name of the list) is used to do things to the list. The second buttom, called Activities, allows you to do things with the list. The third button, called Reports, is used to get information about the list. The customer list All customer information in QuickBooks is stored in the Customer Centre. 1. To view a customer list (and more), click Customer Centre on the Navigation Bar. 33

40 The vendor list As with the customer list, you find vendor information by clicking Vendor Centre from the Navigation Bar. Notice that, unlike the customer list (which is empty), QuickBooks sets up two vendors. These vendors are called Tax Agencies and QuickBooks automatically creates these vendors to track and remit sales taxes. Tax agencies are explained in more detail in a later chapter of this manual. The item list In order to send invoices to customers, your client must populate an item list. From the Lists menu, select item list. Notice that, even before you set up an item, QuickBooks has populated the item list. These items are sales taxes that QuickBooks automatically set up when you created a company file. Sales taxes are described later in this training guide. 34

41 Like the chart of accounts, the Items list also makes use of Types. When creating items, it s crucial to select the correct type. The table below illustrates the various types and their use. Use this item type Service Inventory Part Inventory Assembly Non-inventory Part Other charge Subtotal Group Discount Payment Sales Tax (Item/Group) When Your client charges for intangible items such as an hourly fee, labour or service calls Your client resells physical goods bought from a vendor Your client buys components and resells them as finished goods (only available in QuickBooks Premier Editions) Your client charges its customer for goods like shop supplies or other disbursements Your client charges for miscellaneous services such as shipping charges or set-up fees Your client wants QuickBooks to provide a subtotal for the items appearing up to that point on an invoice Your client wants to quickly group existing items already on the Item List Your client reduces the selling price of the displayed items by a certain amount or percentage Your client received a prepayment (or deposit) from a customer Your client charges Federal, Provincial or other taxes on products or services. These items are used for tax calculations only. Sales tax codes The sales tax code list is used to manage sales taxes levied on purchase and sales transactions. QuickBooks automatically creates tax codes based on the province where the business is located. 1. To explore tax codes, from the Lists menu, select Sales Tax Code List. Chapter 4 of this guide explores sales taxes in more detail. 35

42 Shortcut for working with lists When creating a client s QuickBooks file, consider their list requirements. In most cases, your clients will have similar needs. All, for example, require a chart of accounts and most charts need a bank account, accounts receivable and other accounts such as prepaid expenses, sales revenue and rent expenses. Therefore, rather than continually building a chart of accounts for each specific client, consider creating a standard account template and importing the template into the client s file. This is easily done by using IIF (Intuit Interchange Format) files. Of course, before importing a chart of accounts, you must first export an existing chart. For example, assume that a QuickBooks file you created includes the generic chart of accounts shown below: 36

43 1. To share this chart of accounts with other clients, click the File menu, and select Utilities > Export > Lists to IIF Files. 2. In the Export dialog box, check Chart of Accounts then click OK. 3. Choose a folder location and enter a filename and click Save. 37

44 4. A message displays to indicate that you have successfully exported the chart of accounts. Before you import the IIF list into the new client s company file, back up the client s existing company file. This is important because QuickBooks always assumes you are importing information that is more current than that contained in the existing file. When it encounters duplicate entries, for example, it replaces the entry in the existing company file with the one from the import file. 1. To import the chart of accounts into new client s QuickBooks file, open that file and select File > Utilities > Import > IIF Files. Find the folder location and the filename of the chart of accounts IIF file and click Open. 2. QuickBooks confirms that the chart of accounts has been imported into the client s file. 38

45 3. To verify this action, click the Lists menu and select Chart of Accounts. 4. Notice a discrepancy between this list and the one exported from the original QuickBooks file? This list has no account numbers. To display account numbers: Click the Edit menu and select Preferences Select the Accounting icon Click the Company Preferences tab Click the Use Account Numbers checkbox. 39

46 5. The chart now displays with account numbers. Importing other lists In addition to importing the chart of accounts, QuickBooks lets you import many other lists. This means, if a client has an existing, damaged QuickBooks file, you could export only those undamaged lists Customer, Vendors or Items to a new file. Setting preferences Preferences are functions, customizations and other features that you enable in QuickBooks. For example, to use payroll or inventory, you first enable its relative preference. Preferences also instruct QuickBooks to automate calculations (vendor discounts and finance charges), set reporting parameters (cash vs. accrual accounting) and establish display and navigational options (multiple windows, icons on the Home Page, etc.). To review all available preferences, form the Home Page, click Customize QuickBooks. 40

47 As an accounting professional, there are certain preferences that you want to enable for all client files. The table below suggests some examples. Preference Use to Found under Account numbers Set closing date Warn about duplicate cheque numbers Warn about duplicate invoice numbers Use Undeposited Funds as the default deposit to account Warn when editing or deleting a transaction Assign account numbers to the chart of accounts Prevent unauthorized transactions in a closed period Prevent client errors when recording cheques Prevent client errors when recording invoices Match bank deposits to the bank statement simplifies bank reconciliation Prevent client from inadvertently changing a transaction Company Preference tab of the Accounting icon Company Preference tab of the Accounting icon Company Preference tab of the Chequing icon Company Preference tab of the Sales & Customers icon Company Preference tab of the Sales & Customers icon My Preference tab of the General icon Opening balances There are two methods for recording opening balances. These are: entering opening receivables and payables through the Opening Balance field of the Customer and Vendor profile windows and recording account balances through the Opening Balance screen of the Accounts window of the Chart of Accounts recording journal entries for all account balances The pros and cons for each method are discussed below. Method Pros Cons Opening balance fields Quick and easy No need to understand accounting Saves time QuickBooks does the accounting in the background No control over offsetting entries The date you choose may create erroneous reports QuickBooks creates accounts you may not need 41

48 Method Pros Cons Journal entry More control over offset accounts More reliable reports All amounts are posted to the proper accounts Time-consuming More complex than Open Balance method Knowledge of accounting is recommended To illustrate each method, consider the following trial balance. The next section illustrates how to each to record opening balances from this trial balance. Option 1: using the opening balance fields This simple method is more suited to your clients the end user. It is easy, quick and, as the following example explains, prone to misrepresentation if not done properly. 42

49 1. To enter non-customer or vendor opening balances, your client displays the chart of accounts, right-clicks on an account, and selects Edit Account. 2. In the account s profile window, click Enter Opening Balances. 43

50 3. Input the account balance and the corresponding date. 4. After entering all non-customer and vendor balances, the client s trial balance (found by clicking Accountant & Taxes under the report menu) looks like this. In addition to the absence of Accounts Receivable and Payable balances (they will be recorded in a subsequent step), notice the trial balance shows an amount for Opening Balance Equity. This is the account that QuickBooks uses to offset all opening account balances entered by this first option. 44

51 5. To post the opening accounts receivable and payable amounts, as displayed below, the client uses the opening balance field in the Customer and Vendor profile window. 6. To enter the opening balance for the first-listed customer (PB Halifax Inc.), open the Customer Centre and select New Customer. 45

52 7. After entering the customer s contact information, enter the customer s receivable amount in the opening balance field. Note that this field does not accommodate multiple customer invoices. Therefore only the total receivable amount appears in the opening balance field. 8. After recording all customer balances, from the Vendor Centre record (in the same manner) the total payable to each vendor. 9. Return to the trial balance and notice that, while the accounts receivable and payable now appear correctly, amounts for uncategorized income and uncategorized expenses also appear on the trial balance. QuickBooks uses uncategorized income as the offset 46

53 account for the opening customer balance field and uncategorized expense as the offset for the opening vendor balance field. 10. Move the trial balance date up to the start of the next fiscal year, however, and QuickBooks clears the Uncategorized Income and Expenses account to retained earnings. Note, though, that an amount for Opening Balance Equity still remains. 47

54 11. To clear the Opening Balance Equity account post a journal entry (found under the Accountant or Company menu) that credits that account and debits retained earnings. 12. The trial balance now displays correctly: Option 2: using journal entries to record opening balances Although the opening balance field appears to be a simpler method for your clients, the above example illustrates its limitations. Most accounting professionals, therefore, will prefer to use the journal entry method. Before using this method, it is important to understand a key limitation that QuickBooks sets for journal entries. When recording a 48

55 journal entry, QuickBooks does not allow an accounts receivable or payable account to be used more than once per entry (see illustration below). 1. To bypass this limitation, create a temporary accounts receivable account, using Other Current Asset as the type. 49

56 2. Also create a temporary accounts payable account, using Other Current Liability as the type. 3. With the two temporary accounts created, record a journal entry that reflects the closing trial balance. Remember to use the temporary A/R and A/P accounts for the customer and vendor balances. 50

57 4. The next step is to record each individual customer and vendor opening balances, with the proper aging. To accomplish this task, create an item called Open A/R which you link to the Temporary A/R account. 5. From the Lists menu, select Item List and set up the item as illustrated below. 6. To record the opening customer balances, create an invoice for each open transaction. 7. Repeat the process for each open invoice. 51

58 8. To record the opening vendor balance, enter a bill for each vendor and debit the temporary A/P account. 9. After posting all customer and vendor opening balances, confirm that all accounts and amounts appear correctly. 52

59 10. With this second option, all amounts appear correctly. The aged Accounts Receivable report (found under the Customers & Receivable section of the Reports menu) displays correct aging: 11. The Accounts Payable (found under the Vendors & Payables section of the Reports menu) report also displays the correct aging: Reconciling the opening bank balance Recall that the trial balance shows a bank balance of $ It s quite likely this balance will not agree with the bank statement. Assume, for example that the bank statement, as of the trial balance date, shows a balance of $3, and also assume that the discrepancy results from two uncleared cheques: Cheque number 103 for $ Cheque number 105 for $2,

60 To reflect this in QuickBooks, you must record the uncleared cheques and reconcile the bank account. 1. Start by recording a journal entry that debits the bank (for the total amount of the uncleared cheques) and credits Opening Balance Equity. 2. Record each uncleared cheque and credit Opening Balance Equity. 54

61 3. After recording all cheques, click Banking > Reconcile. Enter the bank statement date and amount and click Continue. 4. In the Reconcile window, clear all transactions except for the outstanding cheques. When QuickBooks displays a zero dollar difference (in the bottom-right corner), click Reconcile Now. Creating a file template If you re an accounting professional that often sets up client files, consider creating a standard company file that includes a default chart of accounts, standard sales taxes and other standard preference settings. Give the file a generic name such as COA Template and use the file as the starting point for each subsequent client file, removing or editing the chart of accounts and other settings to better reflect each individual client s needs. 55

62 1. To enter client-specific information such as fiscal year-end and contact information, click the Company menu and select Company Information. In the window that opens, enter the details for that particular client. Spotting common client setup errors In many cases, a client will ask you to review a file they have set up. In addition to issues with Opening Balance Equity, Uncategorized Income and Uncategorized Expenses accounts discussed earlier, be aware of the following pitfalls. Incorrect dates or amounts When a client used the opening balance field to input an incorrect amount or a wrong date, use the account register to make any necessary changes. 1. From the Lists menu, choose Chart of Accounts, and double-click the appropriate account to open the account register. 2. Click either the date field or the amount field of the incorrect entry and click Record. 56

63 Removing or hiding unnecessary accounts If a client creates unnecessary accounts, and if those accounts were never used in a transaction, QuickBooks allows you to delete the account. From the chart of accounts list, Select the account, Click the Accounts button and Click Delete. If, however, an unwanted acccount was used in a transaction, QuickBooks does not permit its deletion. You can, however, hide it from the list by making it inactive. Follow the steps as explained in the graphic above but, rather than clicking on Delete Account, choose Make Account Inactive. To view all inactive accounts, after clicking on the List s Account button, click Show Inactive Accounts. 57

64 All accounts tagged with an X represent inactive accounts. To make an account active again, highlight it, select the Account button and choose Make Account Active. 58

65 Merging duplicate accounts If duplicate accounts exist, and provided they are of the same type, QuickBooks allows you to merge the accounts. Assume, for example, the two accounts circled below track the same revenue. 1. To merge the accounts, select the one to be removed, click the Account button and choose Edit. 2. Change the account number so that it matches the target account and click Save & Close. 3. When QuickBooks confirms that you want to merge the accounts, click Yes. The Merchandise Sales account, along with all transactions, is now merged with the Product sales account. 59

66 Note that once two accounts are merged, you cannot reverse the action. Consider making a backup before proceeding to merge accounts. Tip: To merge accounts when account numbers aren t turned on, change the account s name so that it exactly matches the target account s description (copy and paste work very well for this). QuickBooks will then merge the accounts. Note that like the chart of accounts, you can also merge items, customers, vendors, and so on. Changing an account s type If a client selected the wrong type when creating an account, you can, with some limitations, change the type. Assume that your client created an asset account for a building. Notice that Bank was selected as account s type. 1. To change the account s type, right-click it and select Edit Account. 60

67 2. Click the Account Type drop-down and select Fixed Asset. Although you can change many account types, those accounts that QuickBooks sets up automatically cannot have their type modified. These include: Retained earnings Accounts receivable Accounts payable Undeposited funds Payroll liability Payroll expenses Sales tax payable Uncategorized income and expense Opening balance equity Certain inventory accounts Chapter summary In this chapter you learned how to create a company file and how to spot common set-up errors. You also learned about: the importance of a questionnaire the purpose of lists how to export and import lists how to record opening account balances 61

68 62

69 This chapter explains the common errors your clients make when processing transactions in QuickBooks. It illustrates how to identify common processing errors and it explains how to correct and prevent them. Lastly, the chapter also points out a number of tips and tricks for recording transactions. In this chapter, you will learn: to identify common processing errors to correct errors to offer recommendations to your clients for preventing errors to use shortcuts and other tips for recording information Spotting sales tax errors Most clients will, at some point, incorrectly process a transaction involving a sales tax. In order to understand those processing errors, it s important to understand how QuickBooks handles sales taxes. 63

70 Sales taxes a primer QuickBooks sets up and uses tax codes to simplify the process of charging, tracking and remitting sales taxes. The graphic below illustrates how you use tax codes to calculate tax amounts on purchase or sales transactions. To calculate the amount of tax charged on a form, just select the tax code from the tax code list. And display it on the tax code column. A closer look at sales tax codes 1. To explore tax codes, select Sales Tax Code List from the Lists menu. 64

71 2. Double-click a Sales Tax Code for instance the GST code and QuickBooks opens the Edit Sales Tax Code window. Notice that tax codes are linked to tax items. 3. To view all tax items, click the Lists menu and select the Item List. 4. Double-click the GST sales tax code to open the Edit Item window. The GST Item window reveals the following: the percentage tax charged on all sales invoices the Tax Agency that your client remits the tax to the line on the GST remittance form where the amount for this tax item appears 65

72 5. To view a tax agency, open the Receiver General s profile in the Vendor Centre and click the Tax Agency Info tab. From this tab you enter or edit: the Sales Tax account number the Filing frequency the Filing periods You also use this area to override the GL accounts that track this sales tax. 66

73 Setting up a new provincial tax If your client charges sales tax in more than one province, QuickBooks automates the process of creating additional taxes. 1. Click the Sales Tax menu and select Create Provincial Taxes. 2. In the Create Taxes dialog box, select the desired province and click OK. 3. To confirm the setup, click the Lists menu and select the sales tax code list. Notice that QuickBooks has set up the new province s tax codes Saskatchewan in this case. The codes arepsk for provincial sales tax only and SSK for GST and Saskatchewan tax. 67

74 Creating an industry-specific tax When a client charges a sales tax that only applies to its specific industry (for example a business that levies a disposal tax on tire sales), QuickBooks lets you create designated tax codes, as well as agencies and items to calculate, track and remit this specialized tax. The five steps in creating an industry-specific sales tax are: create an account that tracks the new tax set up a vendor as the sales tax agency that collects the new tax create a sales tax item create a sales tax code set up a sales tax group if this tax is charged in conjunction with another sales tax (optional) 1. To create a GL account, from the chart of accounts list press CTRL + N and, in the Add New Account window, choose Other Current Liability. Click Continue. 68

75 2. Enter an account name and, optionally, a description for the account. Click Save and Close. 3. To create a Tax Agency, from the Vendor Centre click New Vendor. Enter the vendor s contact information then click the Vendor is a Sales Tax Agency checkbox. 4. Click the Tax Agency Info tab. Enter the reporting period and the account that tracks this new tax. 69

76 5. Because industry-specific taxes are generally charged on sales, enter the linked liability account in the Tax on sales field. Click OK. 6. To create a tax item, from the Item list, press CTRL + N and fill in the Item Name field. Enter the rate for the industry tax and the Tax Agency that collects it. Finally, in the field called Sales Tax Return Line, click the drop-down arrow and select Tax on Sales. Click OK to save your settings and close the window. 70

77 7. To create a tax code, from the Sales Tax Code list, press CTRL + N and, in the window, enter a Tax Code and description. Click the Taxable radio button and enter the sales tax item. Setting up a sales tax group Assume your client charges both GST and an industry-specific tax on invoices. For QuickBooks to charge both taxes, you must group them. 1. Return to the Item list and create a sales tax item, making sure the item type is Sales Tax Group. In the table at the bottom of the window, enter the tax items that make up this group. Click OK to close the window. 71

78 2. Return to the Sales Tax Code list and create a tax code for the grouped taxes. In the Tax Item for Sales field, select the item that you created in the previous step. Click OK when you re done. 3. When you create sales invoices, choose the Group Tax Code (TTG in this example) in the Tax column and QuickBooks adds both GST and the industry tax to the sales form. 72

79 4. To view the industry specific tax owing, from the Menu bar, click Sales Tax > Tax Agency Detail report. Select Ministry of Environment in the Tax Agency field and enter a reporting date. The report displays the required information. Overview of uncategorized taxes With the existence of tax codes and tax items, your clients, in the normal course of business, should never need to directly debit or credit a sales tax account. There are occasions, however, when an entry must be made to a sales tax account. If not properly recorded, these entries will invariably trigger uncategorized tax. An uncategorized transaction is one that involves a sales tax account, but that does not have a sales tax return line associated with it. When a transaction directly debits or credits a sales tax account, if no tax item is specified, QuickBooks doesn t know where on a tax return to display that amount so QuickBooks puts it on a line called uncategorized sales tax. As an example, assume your client posts a journal entry that debits a revenue account and credits a sales tax account. 73

80 Although QuickBooks displays this warning, many clients will nonetheless click Continue, and thereby create uncategorized tax. Other causes of uncategorized sales tax Uncategorized sales tax also occurs when you: write a cheque and choose a sales tax account to debit make a deposit crediting a sales tax account bypass sales tax codes on vendor bills and credit card entries and use a sales tax account to record the tax amount Note that, while QuickBooks displays a warning for some transactions, it doesn t do so for all transactions. For example, QuickBooks offers no warning for the second and third bulleted items listed above. Correcting uncategorized transactions In general, the first indication of uncategorized taxes occurs when a client files a tax return. If uncategorized tax exists, QuickBooks displays this message. 74

81 To view uncategorized taxes, click the Uncategorized Tax Amounts Detail Report under the Sales Tax menu. The report above reveals that the uncategorized amount stems from the journal entry illustrated earlier. Recall that, when recording the journal entry, QuickBooks displayed a warning advising the user to select a tax item. Therefore, for this uncategorized transaction, the solution is to double-click the uncategorized tax amount, open the journal entry window and add a tax item to the originating journal entry. However not all uncategorized transactions are as easily solved. Assume, for example, that a customs broker reimburses a client for overcharged GST. Also assume the client 75

82 records the transaction via the deposit shown below. Note that, because the window has no sales tax column, by recording the deposit, your client has created uncategorized tax. To re-categorize this transaction, make a sales tax adjustment as illustrated below. Making sales tax adjustments 1. Click the Sales Tax menu and select Adjust Sales Tax Due. 2. In the Sales Tax Adjustment window, enter the adjustment date, and select the name of Tax Agency. 3. Click the Sales Tax Item drop-down list and select the sales tax item. (In this example, assume the uncategorized amount of $250 is linked to Line 106 -GST ITC). 4. Because you are assigning a sales tax item to an uncategorized GST transaction, click the Adjustment Account drop-down list and choose GST/HST payable. 5. Enter the amount of the uncategorized sales tax. 6. Because the purpose of the uncategorized transaction is to increase total GST payable through a reduction in ITCs, click the Decrease Sales Tax line button. This tells QuickBooks to decrease Line 106 on the GST return. 76

83 7. If desired, enter a memo to describe the adjustment. Preventing uncategorized taxes Assume, for example, your client makes GST instalments. Rather than recording a cheque debiting the GST account, ensure your client uses the GST Instalment item to record the payment. 77

84 When recording a journal entry that posts to a sales tax account, make note of the following: When you select a sales tax account, QuickBooks automatically indicates the Sales Tax Agency. You must, however, enter the tax item for the sales tax account. Failing to do so results in uncategorized tax. Tip: When recording a GST reimbursement that was inadvertently charged by a vendor, customs broker, or other source, record the deposit via a journal entry (as explained above). Filing a sales tax return 1. Once all uncategorized transactions are adjusted, file a tax return by selecting the Tax Agency report from the Sales Tax menu. 78

85 2. Select the Tax Agency (in this example, Receiver General) and the reporting period. Note that, for the reporting period, uncategorized tax is zero and the amount owing is $5, Tip: While not illustrated here, QuickBooks also offers a detailed tax agency report. It s recommended to review and print this report before filing a tax return. 79

86 3. From the Sales Tax menu, click File Sales Tax, choose the Tax Agency and reporting period then click File Tax Return. 4. QuickBooks prompts you to print the return. If you haven t done so, click Yes. 5. For taxes due, QuickBooks prepares a bill crediting accounts payable and debiting the GST accounts. To pay the bill immediately, click Pay Now. 80

87 What if there s a sales tax refund? When the client is owed a refund, QuickBooks adds the refund as a receivable from Receiver General. After filing the tax return, QuickBooks displays the following window. Click Receive Later and when your client receives the refund, she records it in the Customer Receiver Payments window Making other tax adjustments You may need to adjust your client s sales tax because of rounding errors or late-filing penalties. Depending on your home province you may also need to add to (or self-assess) the sales taxes your client owes. Or you may need to reduce the tax owing because of an available compensation. Use a sales tax adjustment for any of these examples. 1. Assume the Sales Tax Agency report for Ontario PST shows a tax liability of $1704. Also assume the client is eligible for a 5% compensation of the amount owed. 81

88 2. To record the discount, open the Adjust Sales Tax Due window, enter a date and select the Tax Agency. 3. Choose the PST Compensation Sales Tax Item and enter an adjustment account such as PST Compensation. 4. Finally enter the amount, select Increase Tax line and record a memo. Click OK to complete the process. 5. The tax due is now reduced by the compensation amount. 82

89 Accounts receivable errors Although sales tax errors are, by far, the most common, many QuickBooks users are also prone to making the following sales and accounts receivable errors. Undeposited funds The undeposited funds account is designed to group customer payments (and other receipts) and hold the payments until the client actually makes a bank deposit. Using undeposited funds makes it easier to reconcile the bank account because the deposit on the monthly bank statement is the same amount as the bank deposit in the QuickBooks cheque register. The graphic below illustrates the correct way of processing customer payments in QuickBooks. In many cases, clients bypass undeposited funds and send each individual customer deposit directly to the bank account. This makes reconciliations very difficult, especially if many customer deposits are received in the same period. To correct this error: edit the original payments in the Receive Payments window select Undeposited Funds from the Deposit to drop-down list group the payments from Undeposited Funds in the Make Deposits window to match the actual bank deposits mark the Use Undeposited Funds as a default deposit to account checkbox in the Sales & Customers preference window so that the Deposit to drop-down list no longer displays in the Receive Payments window Another common error occurs when a large balance remains in the undeposited funds account. This occurs when a client enters customer payments in the Undeposited Funds account, and then enters the same payments again as deposits in the account register or in the Make Deposits window. 83

90 There are two methods for correcting these types of transaction errors. Correct each deposit individually by finding the duplicate deposits in QuickBooks usually recorded in the Make Deposits window. In the Make Deposits window, delete the erroneous deposits by pressing CTRL+D. When QuickBooks confirms the deletion, click OK. If your client has been making this error for a long time, the balance in Undeposited Funds could be substantial, and correcting every deposit would be impractical. In this case, you can create one zero-sum deposit to make the adjustment. Use the Make Deposits window to deposit all of the payments in the Undeposited Funds account. 1. In the Make Deposits window, add a line to the deposit. In the From Account column, enter the name of the income account that was overstated. Enter a negative number for the portion of the deposit attributable to income in the current year. 84

91 2. Add another line to the deposit for the portion related to prior years. In the From Account field enter Retained Earnings. 3. Enter a negative number for the balance. The deposit amount will be zero, the Undeposited Funds account will be cleared to zero and the income and equity accounts will be correctly restated. Open invoices If paid invoices still show up on a client's open invoices report, the client may have entered the payments by using the Make Deposits window and crediting an income account. There are two methods to correct this error. The first suggested method is to: find the original deposits (as explained above) and delete the erroneous entries re-enter the cheques using Receive Payments and move the money into Undeposited Funds assemble the payments back into the original deposits from Undeposited Funds 85

92 An alternative method involves: editing the deposits entered by recording a journal entry that credits Accounts Receivable. Remember that you must choose the customer in the Name column of the journal entry screen; this creates a credit in the customer s file apply the credits to the invoice using the Receive Payments window. Another clue to a common error occurs when a customer s accounts receivable amount shows as a zero balance, but with both a positive and a negative number appearing on the report. The sources of this error include: a customer payment is processed but is not applied against an open invoice a credit note is issued to a customer but not applied to an open invoice a customer deposit is recorded via a journal entry In all cases, QuickBooks credits the customer s account but does not assign the payment to an open invoice. This results in reports displaying both the customer s open invoice (as a positive number) and payment (as a negative number). To correct these errors: 1. From the Customers menu, choose Receive Payments. 86

93 2. In the Received From drop-down list, select the customer's name and a message displays indicating the amount of available credits. 3. Without selecting it, highlight the invoice to which the credit is to be applied. Click Discounts & Credits. 4. Assign the credits to the appropriate invoice(s) and click Done. 5. After QuickBooks returns to the Customer Payment window, click Save & Close. 87

94 The customer reports will no longer show positive and negative balances, which should reduce client confusion. Accounts payable errors As with the receivable errors illustrated above, many clients repeatedly fall into the following traps. Open bills If your client records vendor payments with a journal entry or writes a cheque and debits accounts payable, the original bill stills appears in QuickBooks. 1. To correct this error, choose Pay Bills from the Vendor menu and QuickBooks lists all open bills in the table section of the window. 2. Choose the open bill and click Set Credits. This opens a window that reveals any debits to accounts payable. 88

95 3. Select the debit and click done. This zeroes the open bill and AP debits and removes any vendor balances from the reports. Double-counted expenses One of the most common mistakes occurs when clients use Write Cheques to pay a bill that was recorded in the Enter Bills window. Although QuickBooks displays this warning when using Write Cheques for a vendor with an open bill, many users ignore the warning and continue on to the Write Cheques window. This causes QuickBooks to overstate expenses and to show the vendor bill as still unpaid. Although an easy fix is to delete either the open bill or the cheque, this could lead to complications with the bank reconciliation, with sales taxes, and with the timing of the expense. A better solution it to record a credit memo that credits the same expense originally debited when the cheque was written. 89

96 Assume, for example, your client, in an attempt to pay a bill, entered this cheque.. A quick look at the general ledger for telephone expense shows two debits for the same expense (one originating from the bill and the second originating from the cheque). To correct the error, record a credit memo then pay the original bill and apply the credit. This results in a zero payment and reverses the double entry to telephone expenses. 90

97 Clearing contra accounts For businesses that have customers who are also vendors, they might want to offset what they owe the vendor against what the customer owes them. You can't offset these amounts using a single journal entry because QuickBooks does not allow using an accounts receivable or payable account more than once per journal entry. Creating multiple journal entries, on the other hand, is inefficient and confusing for most users. Use the following workaround instead. 1. In the chart of accounts, create a bank account called Clearing Account. 91

98 2. Open the Customer Receipts window and enter a customer payment. Note that the customer payment is deposited to the Cleanring Account. Note too that Contra was set up as the payment method. 3. Next, open the Pay Bills window and pay the amount owing, making sure to select Clearing Account as the payment account. 92

99 4. The accounts payable and accounts receivable are now offset and the clearing account shows a zero balance. Voiding transactions Although QuickBooks allows your clients to delete transactions, it s preferable to void rather than delete a transaction. Deleting a transaction removes all traces of its existence (other than in the Audit Trail). Voiding means the original transaction remains but that its amount is changed to zero as of the original transaction date. A voided transaction, therefore, still appears in the general ledger. Voiding transactions in the current period 1. To void any transaction (in this example, a cheque) in a current period, display the transaction using the form s Previous arrow to find recent historical transactions. 2. Click the Edit menu and select Void Cheque. 93

100 3. QuickBooks zeroes the amounts and writes VOID in the memo field 94

101 Voiding transactions in a closed period If you void a cheque in a closed period, QuickBooks displays this window. Click No and, rather than voiding the cheque, enter a journal entry, dated in the current period, which debits the bank account and credits the original expense. Working with journal entries Although journal entries are discussed elsewhere in this document, it is important to emphasize their features and limitations. Features of the journal entry window Because most accounting professionals prefer using journal entries to record transactions, it s crucial to understand the impact that these entries have on the various reports your clients may consult. Study the features below, and be aware that while most apply to all versions of QuickBooks, some of the listed features apply only to the QuickBooks Premier Accountant edition. You can print journal entries directly from the General Journal Entry window. When you select the Automatically assign general journal entry number preference, QuickBooks assigns numbers to journal entries for you. 95

102 You can set QuickBooks to automatically repeat, on each subsequent line, the text you write in the first line s Memo field. You can create reversing entries by clicking Reverse in the General Journal Entry window. You can create adjusting entries by selecting the Adjusting Entry checkbox in the Make General Journal Entries window. This lets you see a list of the adjusting entries you ve made by running the Adjusting Journal Entries report. The entries will also appear in the Adjustments column of the Adjusted Trial Balance. You must specify a customer name for entries to accounts receivable accounts. This way, QuickBooks can assign the entry to the proper name in the Customers account and on customer reports. To make a global adjustment to accounts receivable, create a customer called "Accountant s A/R adjustment" and use it in the Name field of the journal entry. If you reverse the entry, be sure to use the Receive Payments window to apply the credit to the entry. You can use only one accounts receivable and/or payable line in any single journal entry transaction. If you are adjusting a number of customer or vendor balances using journal entries, you need separate journal entries for each adjustment. You can post to retained earnings. Although there is no register for this account, you can view journal entries posted to the account by highlighting the account name in the chart of accounts and generating a QuickReport. You can also QuickZoom (double-click) on retained earnings line items in reports. Common journal entry errors Because QuickBooks is designed to use forms (invoices, customer payments, payroll, etc.), journal entries may, at times, cause conflicting information in various reports. Previous sections of this chapter touched on the impact that the incorrect use of journal entries have on sales taxes and vendor bills. Consider the following two additional examples. Journal entries and payroll Review the balance sheet and the Payroll Liabilities window below. Note that the amount payable agrees in both reports. 96

103 If you create an entry to a payroll liability account, you might inadvertently cause the control account and the supporting reports (for example, PD7A) to be out of balance. 97

104 A journal entry, such as a sample year-end adjustment as seen below, will cause the payroll liabilities reports to disagree with the control account. To prevent this error, use the Payroll Liability Adjustment window (found under the Employee menu). Tip: Because of payroll s inherent complexity, consider attending the QuickBooks Payroll course for an in-depth discussion on this topic. 98

105 Journal entries and inventory In a similar fashion to the above example, a journal entry debiting or crediting an inventory account will change the control account s balance but won t adjust the QuickBooks inventory reports. To prevent creating out-of-balance inventory amounts, use the Adjust Quantity/Value on Hand window (found under the Vendors, Inventory Activities menu). Bank reconciliation errors When reconciling a bank account, if the difference amount is not zero and your client nonetheless clicks Reconcile Now 99

106 QuickBooks opens a window asking how to treat the unreconciled amount. Should your client click Enter Adjustment, QuickBooks will adjust the bank account by the out-ofbalance amount and record the offsetting amount in an expense account called Reconciliation Discrepancies. To correct this and other bank reconciliation errors, you can cancel a prior reconciliation by clicking Reconcile under the Banking menu and selecting Undo Last Reconciliation. This allows you to redo a given month s bank reconciliation. Deleting reconciled transactions Another bank reconciliation trap occurs when a client deletes a previously-reconciled transaction. In general, the first indication that a reconciled amount was deleted or changed occurs when the beginning balance of the reconciliation window no longer agrees with the prior month s ending balance. 100

107 1. To view any changes made to a reconciled account, click Locate Discrepancies and open the Discrepancy Report. 2. After determining the nature of the discrepancy, either undo or restart the last reconciliation. 101

108 Finding information QuickBooks provides a variety of ways for finding information. This section describes three built-in tools that facilitate finding information not only in QuickBooks, but also on your computer s internal or network drives. Simple find 1. To quickly find specified transactions, click the Edit menu, select Find and click the Simple Find tab. 2. In this window, you first select a transaction type from the drop-down list. 3. Search by name, date, transaction number and amount. Advanced find This option widens the search parameters by letting you filter your search based on any one of the parameters that appears in the Filter scroll box. 102

109 1. Choose Transaction Type in the scroll box, and select the type of transaction to filter on. 2. To narrow the search parameters, note that you can select as many filters as you like. Google desktop This search tool offers even greater flexibility. In addition to searching a QuickBooks data file, Google Desktop lets you search all the files on your computer. Google Desktop is a free-form search tool that returns a wider array of information. For example, if you search on 500, Google Desktop will match any record meeting that parameter. This includes amounts of $500, addresses that include 500, or item numbers incorporating that sequence of numbers. 1. To use Google Desktop enter a search term and select either Search QuickBooks or Search QuickBooks and Desktop. 103

110 2. Google Desktop then displays a list of matching records. Chapter summary In this chapter you learned how to find and troubleshoot common client errors. This includes: sales tax errors errors with customer and vendor transactions common bank reconciliation mistakes Lastly, in this chapter, you learned about the available search tools found in QuickBooks. 104

111 Reporting is one of the key strengths of Quickbooks. Its design means that historical reporting is always available no matter the fiscal year or periods required. As an accounting professional, you ll want to extract the most out of the reporting options available to you. In this chapter, you will learn:: the report types available modifying and memorizing reports exporting and sharing reports the Financial Statement Designer Report types There are three types of QuickBooks reports. These are: Summary Transaction List 105

112 Summary reports These reports summarize and subtotal general ledger accounts. They do not show transaction details. A standard profit and loss report is an example of a summary report. Transaction reports These reports show every transaction that makes up an account s total. For example, the profit and loss detail report shows year-to-date transactions for each income and expense account. 106

113 List reports List reports do not display transaction information; they display information stored in lists such as the Customers & Jobs, Vendor, and Item lists. Using the Report Centre The Report Center is an effective way for your clients to find and to learn about QuickBooks reports. The Report Centre also contains links to memorized reports, to the report preferences (explained later) and to a learning tool that contains a number of help topics describing how to use QuickBooks reports. 1. To open the Report Centre, click its name from the Navigation Bar. Each report title includes a short description of what the report conveys and a preview pane that displays a sample of each report. 2. Click the Report Centre s preview pane to see a sample of the report. 107

114 Changing the scope and layout of reports Preferences affect how QuickBooks displays information in reports and graphs. If reports aren t providing the information you require, it may be because an incorrect preference was set, or it may be because a report was improperly modified. 1. Visit the Preferences window, select the Reports & Graphs icon and click My Preferences. 2. From My Preferences, you can determine the refresh options for reports, the display options for graphical reports and you also choose whether to modify reports before they open. 3. From Company Preferences, you can choose whether to display reports on the Accrual or Cash basis, and you can also determine aging calculations and the display options for account numbers and names. From this tab, you also classify cash for the Statement of Cash Flow report. 108

115 4. The Format button lets you determine default headers and footers to display, as well as Fonts and Number settings for every report Modifying reports If none of the QuickBooks preset reports provide the information you want, you can create custom reports to get the information you need in the format you want. From any report, click the Modify Report button. There are four tabs, explained below, on the Modify Report window. The Display Tab This window lets you change several report elements at once. Remember that there are three types of reports. The Display tab varies according to the type of report you are viewing. The graphic below shows the Display tab of a transaction report. Notice that you can check the columns to be added or omitted on the report. In some cases, you can total the report using a specific criterion by choosing it from the Total by drop-down list. You can 109

116 do the same with Sort by. In addition, you can sort the data in either ascending or descending order. Click the Advanced button to open the Advanced Options window. Here you make additional adjustments to display elements in the report. For transaction reports, you choose whether to show all of the accounts, customers, vendors, or items on the report (even if you did not have any transactions with them during the reporting period). Or, you can choose to exclude the elements with no transactions within the report's date range. The Open Balance/Aging options relate to the date range included on reports showing receivables and payables transactions. Selecting Current allows QuickBooks to process the report faster. Also, the report will show all transactions affecting A/R or A/P regardless of the date range you set on the report. To run A/R or A/P aging reports that agree with the balance sheet for a prior period, select Report Date. The following graphic is an example of the Display tab window for a summary report. Unlike a transaction report, the display tab for this report lets you set the date range, 110

117 choose the report basis and add subcolumns to use for data comparison. In this window, you also change the columns the report sorts on and the order in which the columns are sorted. Clicking Advanced opens the Advanced Options window, where you can make additional adjustments to the report s display elements. By default, QuickBooks displays information for Active rows and columns (rows and columns that show activity during the reporting period) only. In this window you can change the setting to All (which displays accounts and names even if there was no activity during the reporting period), or Non-zero, which hides all accounts and names that have a zero balance during the reporting period. The default date range for non-payroll summary reports is the current fiscal year, but you can change the reporting calendar for the current report using this window. Because payroll information is usually based on a calendar year, payroll report dates are always set to Calendar Year. 111

118 The Filters tab Filters let you change the scope of a report by limiting the report to transactions that meet the criteria you specify. You can filter reports by dates, names, accounts, and in many other ways. You can apply filters either one at a time or in combination with each other. Each additional filter you apply further restricts the content of the report. Header/Footer tab As introduced in the discussion on report preferences, the header sections of this tab lets you edit the information in the Company Name, Report Title, Subtitle, and Date Prepared fields. To remove a line from the header, clear the checkbox for that line. Use the footer section to edit the page numbering style and add an extra line to the report footer. To remove a line from the footer, clear the checkbox for that line. 112

119 On the Page layout section, you can change the alignment of the page (Left, Right, Centered, or Standard) from the Alignment drop-down list. The Fonts & Numbers tab From this tab, you can change fonts for each element independently and you can determine how numbers appear on a report. 113

120 Making quick changes to a report With List and transaction reports, you can move one column at a time by selecting it and dragging it with the mouse. 1. Place the cursor over a column header until it changes to a hand icon. Hold the left mouse button down and drag the column to either the left or right. A red arrow shows you where the column will be inserted. When you release the mouse button, the column is moved to the new location. 2. To make a column wider, drag the small diamond at the right of the column title to the right. To make it narrower, drag the small diamond at the right of the column title to the left. This adjustment is especially helpful when a report doesn't quite fit across a single page. 114

121 Using QuickZoom 1. To view more detail from any report, place the cursor over an item until it resembles a magnifying glass. Double-click to view more detail about the item. Here s how QuickZoom works with various types of reports: When you QuickZoom on a line in either a summary report or graph, you get a transaction detail report of the activities that comprise that number. When you QuickZoom on a line in a transaction report, you get the transaction form or window. You can then review and edit the transaction. When you QuickZoom on a line in a list report, QuickBooks displays the edit window for that list entry. Memorizing and managing reports After modifying a report, you won't want to adjust the display and filtering options the next time you need the report. Memorizing reports saves all of the customization and filtering changes. Memorizing also saves the print settings and column widths (for Detail and List reports only). The next time you generate the report, QuickBooks recreates the report format, but uses the latest financial data. 115

122 Using memorized reports QuickBooks stores all memorized reports in the Memorized Report List, which you access from the Report Centre or by clicking the Reports menu then selecting Memorized Reports. The Memorized Report List includes predefined groups of memorized reports. You can use the predefined groups as-is, modify them to suit your clients' needs, or create your own groups. For example, you could create a memorized report group called Year End, and include in that group all the reports you would like your clients to run at year end. Then, to prepare reports, your client selects the Year End group and QuickBooks processes all the reports in the group (with the settings you specified). 1. To create a memorized report group, click the Memorized Report List s button at the bottom-left corner and select New Group. 2. Type in the group name and click OK. 116

123 3. To memorize a report and add it to the year end group, run the report, modify it to your requirements, and click the report s Memorize button. 4. When the Memorize Report dialog box opens, enter a report name. Click the Save in Memorized Report Group checkbox and select Year End as the group. Click OK to close the window. 5. After you ve saved all required reports in the Year End group, the Memorized Reports Lists looks like this. Preparing report batches Once reports are grouped on the Memorized Report List, preparing a report batch is only a few mouse clicks away. 117

124 1. Highlight the desired group and click print (or display or export). 2. QuickBooks opens a window allowing you to customize the date range and, if necessary, deselect any reports in the group. Click Display to simultaneously open all reports in a group. Creating report templates Report templates let you import modified reports into any client file. Report templates save time by letting you customize a report once and share it among multiple company data files. Note that only the report formatting, and not the financial information, is shared. Although you can import a template with any QuickBooks version, you need QuickBooks Premier to export report templates to other QuickBooks files. 1. To export a memorized report template, first ensure it is saved in the Memorized Reports List. Select the report from the list, click the Memorized Report button and select Export Template. 118

125 2. Enter a location and filename for the template (note that all templates have a.qbr extension) and click Save. 119

126 Importing a report template To import a template, first note that the company data file into which you are importing the template must be using the same QuickBooks version and release as the one in which the template was created. 1. To import the template, display the Memorized Report list and from the Memorized Report menu button, select Import Template. 2. Select the name of the memorized report file (which has a.qbr extension) you want to import. 3. Click Open. 4. Accept the default report name, or enter a new one. 5. Click OK. Exporting reports to Microsoft Excel For greater flexibility in report formatting, data manipulation, and customization, export reports from QuickBooks to Microsoft Excel. To export reports, you must be using Microsoft Excel version 2000, 2002, or To send a report, display the report and click Export on the report s button bar. 2. QuickBooks then lets you select whether to send the report to a new or existing workbook. If you choose an existing workbook you can create consolidated reports or combine information from several reports in one workbook. 120

127 3. When you export a report to an existing workbook, you either specify the location of the worksheet within that workbook or send it to a new worksheet. 4. Click Export and QuickBooks launches Excel and displays the report. When you export data to Excel, QuickBooks sends the data in the following format: The data in the report is formatted as it is displayed on-screen. By default, QuickBooks preserves the look and feel of the report when exporting to Microsoft Excel. The row and column labels in the QuickBooks report will be text fields in the spreadsheet. This means that you can edit and change the labels as needed, which is something you cannot do in QuickBooks. Numbers in the QuickBooks report will be numeric fields in the spreadsheet. Calculated formulas for subtotals, totals, and analysis in QuickBooks will be formulas in the spreadsheet. This means that you can edit the numbers and the spreadsheet will recalculate the totals. Headers and footers from QuickBooks will be entered as headers and footers in the spreadsheet. This means that you will not see them on-screen, but can view them by choosing Print Preview from the Excel File menu. 5. If you want more control over how the report displays in Excel, click the Export Report window s Advanced tab. This window lets you change the default format and print settings that QuickBooks uses when exporting reports to Excel. It also lets you 121

128 turn on some additional features such as Auto Outline and Auto Filtering (explained below). Auto outline When working with reports in QuickBooks, you can only expand or collapse the data in the entire report and not on portions of the report. To get more control over the level of detail displayed in a report, select the Auto Outline checkbox in the Advanced Options window. When you select this option, you can expand 122

129 or collapse sections of a report independently of other sections. You can also choose the level to which you want to expand or collapse the data in any given section of the report. Auto filtering If you need more filtering capabilities than are available in QuickBooks, select the Auto Filtering checkbox in the Advanced Options window. You can then take advantage of 123

130 Excel s extensive filtering options to choose filters for each column. Combining the reports you create and customize in QuickBooks with the power of these additional Microsoft Excel features gives you greater flexibility to get exactly the reports you want from QuickBooks. The financial statement designer The Financial Statement Designer, available only in Premier Accountant Edition, allows you to customize financial statements that are linked directly to the client s QuickBooks data. Because it is linked with the client s QuickBooks file, you work with live data in the statements without having to export the data to another program. With the Financial Statement Designer, you view a client s financial statements and use QuickZoom to edit a source transaction in the client s QuickBooks company file. When the Financial Statement Designer refreshes the data on the statement, the new account balances appear automatically. Note the following features of the Financial Statement Designer: When you install QuickBooks, the Financial Statement Designer automatically installs in the following folder: C:\ProgramFiles\Intuit\QuickBooks\components\FSD. In the path above, QuickBooks represents the particular version of QuickBooks you have installed. You cannot change the location of the Financial Statement Designer, but you can save the client s financial statements and supporting documents to a location that better suits your needs. The first time you access the Financial Statement Designer a client (data storage 124

131 file) is created. Only the QuickBooks Administrator can create the client. Once the client is created, you must have Sensitive Financial Reports and Sensitive Accounting Activities permission to access the client in the Financial Statement Designer. In addition, if you are using customer:job filtering, you are also required to have Sales and Accounts Receivable permission. When accessing the client for each QuickBooks company, the Financial Statement Designer matches the two files based on Company Name, Business number and Postal Code. If any of these items change or if you move the QuickBooks company file, the Financial Statement Designer guides you through the process of matching the company file with the correct customized statements. The saved financial statements and supporting documents in the Financial Statement Designer are not included in the QuickBooks backup routine. Your clients financial statements and supporting documents are located in the clients subfolder. The default location of the client s folder is the following: C:\Program Files\Intuit\QuickBooks\components\FSD\clients. If you used the Select File Location feature in the Financial Statement Designer to move a client s financial statements, the clients folder is located where you specified and not in the default location. Tip: When using the Financial Statement Designer, ensure you create a process for manually backing up clients financial statements and supporting documents. Using the financial statement designer 1. From the QuickBooks Reports menu, choose Financial Statement Designer then choose whether to create a new financial statement or to reconnect with an existing design. 125

132 2. Double-click the name of a financial statement to open it in a spreadsheet-like window. 3. QuickBooks opens the Financial Statement Editor. The Financial Statement Editor contains spreadsheet-like features that allow you to insert rows and columns, add 126

133 accounts and formulas, change account names, and customize the formatting of financial statements to meet the needs of each client. Using the Financial Statement Editor The following sections describe how to use the Financial Statement Editor. QuickZoom from account balances Use the QuickZoom feature to jump directly from a balance on a financial statement to a detailed transaction report in the client's QuickBooks file. Just like a report in QuickBooks, double-click on any balance and the program takes you to a detail report of that account s activity. Another click takes you to the original source transaction. When you edit a source transaction or create an adjusting entry, the financial statements update automatically. Insert rows and enter formulas Insert rows and enter formulas to perform functions such as creating sections that report net income before and after income tax. Insert rows to group accounts in any way you like including adding subtotals or blank rows for spacing. When you add an Account row (a row with an account balance), you 127

134 can then select which accounts you want to be part of that row and what the description should be. Group accounts Group accounts together (for example, all bank accounts and undeposited funds) into a single line on the financial statements to which you can assign a name, such as Cash & Cash Equivalents. You can assign multiple accounts to a row and choose whether the row should be displayed as collapsed or expanded. This is helpful when deciding how much detail to show on the statement. Insert columns and enter formulas Insert columns to further customize the financial statement to show prior period balances or variance between other columns. Insert cells and enter formulas Insert cells and enter formulas to perform mathematical functions. You can also modify cells to report on beginning and ending inventory. Filter by class or customer:job If a client uses classes or customer:jobs in QuickBooks, filter the client s account balances by those classes or customer:jobs for profit & loss reports only. QuickBooks does not support balance sheet reporting by customer:job or class, and you cannot use the Financial Statement Designer to create a balance sheet by customer:job or a balance sheet by class. Round statements Round financial statements to the whole dollar and assign the cents to an account that you choose to ensure that report totals foot accurately. 128

135 Accessing financial ratios When you select Current Year Financial Ratios in the Financial Statement Organizer, a new window opens with the most common financial ratios pre-filled with your client s data. Using the Supporting Documents editor Use the Supporting Document Editor to design documents such as title pages, compilation letters, and audit reports that accompany the financial statements. 1. Scroll down on the Financial Statement Organizer to find the document you d like to use. 129

136 2. Enter the accountant s contact information, and the Supporting Document Editor includes that information on the document. Standard letters Using the Supporting Document Editor, you can choose from several standard compilation, review, and audit engagement letters. Additionally, you can create new letters from scratch. Updating title pages and letters When you update the statement date, dates throughout the letters and title pages are automatically updated so you don t need to update them manually. Inserting company information In addition to making formatting changes, you can also add fields containing client information pulled from QuickBooks (such as company name, address, company type) to financial statements and supporting documents. Creating a supporting document from scratch 1. To create a supporting document from scratch, from the Financial Statement Organizer, click the File menu, select New, then select Supporting Document. 130

137 2. Prepare the supporting document. 131

138 3. Click File, Save, enter a document name then click Save once more. 4. The saved document now appears on the Financial Statement and Supporting Document list. The account register As described in an earlier chapter, all balance sheet accounts (except retained earnings) carry a register that displays full details of each account s transaction history. 1. To view an account register, double click the account s name from the chart of accounts, or press CTRL + R. 2. Select the account to view and click OK. 132

139 3. QuickBooks then opens the account register. 4. In the register you can: use the Sort by field to display transactions by date, amount, reference number or other sorting methods click the Go to icon to search for specific transaction double-click a transaction to drill down to the source entry click the Splits button to view the account distributions click 1-line to condense the information displayed in the register print a range of transactions Tip: Although limited in terms functionality (inability to accept tax codes, for example) it is possible to enter transactions directly into an account register. Because of a register s limitations, we recommend that only advanced users record transactions in this manner. The customer register Similar to an account register, the customer register displays an individual customer s account history. As with the account register, your clients can enter sales information directly into the customer register. All transactions thus entered can then be summarized on a billing statement. Because of a register s many limitations, reserve this method of recording transactions to advanced users. 133

140 1. From the Customers Navigator, select New Transactions and click Statement Charges. 2. The customer register offer the same sorting and printing options found in the account register. In addition, to view only unpaid customer transactions, click the checkbox called Show open balance. 134

141 Chapter summary In this chapter you learned about the many ways of extracting, displaying, memorizing and sharing information in QuickBooks. In particular you learned how to: understand report types use the report centre set report preferences modify, memorize and export reports use the financial statement designer view and use registers 135

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143 For most users, the inherent features found in every version of QuickBooks are powerful and flexible enough to meet all their requirements. Unknown to most users, though, is that QuickBooks lets you tap into additional and more powerful functionality. This added functionality comes in two versions: workarounds and add-ons. In this chapter, you will learn:: when a work-around or add-on is appropriate for your client to identify the QuickBooks elements that lend themselves to workarounds to recognize the benefits and limitations of add-ons to navigate the Intuit Marketplace Recognizing the need for a workaround In many cases, clients look outside QuickBooks to address their incremental information procession needs. And, in most of those cases, their devised solutions range from ineffective to error-prone. Two examples are: excessive use of Excel spreadsheets to accommodate simple reporting, such as using a spreadsheet to obtain detailed sales data or commission amounts 137

144 use of non-financial software applications for basic functions, such as the use of a word processor to issue invoices or charitable donation receipts. In most cases, strategies similar to those described above stem from a user s lack of fluency or confidence in QuickBooks. And, in most cases, simple workarounds or thirdparty add-ons are available to address every user s requirement. What s a workaround? While a dictionary might define a work-around as a temporary kluge used to bypass, mask or otherwise manage a system s inefficiencies, in a QuickBooks context, a workaround means configuring it in a non-conventional way to produce a designated task or to acquire required information. Using QuickBooks features as workarounds Listed below are built-in QuickBooks features that a user can reconfigure as a workaround: Custom Fields Customer & Vendor type lists Underutilized lists such as ship via Sales tax items, groups and codes Forms Items Reports The following sections offer examples for each feature. Custom Fields Custom fields are designed to capture additional user-defined information for customers, vendors or employees. Custom fields can be used to track: the spouse s name of a customer, vendor or employee a new customer s referral source invitations to special events such as golf tournaments or exclusive sales promotions a customer s product preference an employee s next-scheduled performance review 1. To set up a custom field, click the Additional Info tab of a customer, vendor or employee s profile. 138

145 2. From the Additional Info tab, click Define Fields to open a dialog box that accommodates 15 user-defined fields applicable to customers, vendors or employees. 3. After setting up field labels, close the Define Fields window and return to the Additional Info tab and input the client-specific additional information. 4. After setting up custom fields, the fields information displays on forms, lists and reports, such as the Customer Contact List (below). You can use the Customer 139

146 Contact List to invite key customers to events, to send product catalogues, or for any other marketing activity. Customer & Vendor type lists Most businesses categorize customers and some might classify vendors. Use Customer and Vendor Types to achieve this grouping objective. 1. From the customer or vendor s profile, select the Additional Info tab, and click the Type drop-down to create and track customer or vendor types. 140

147 2. With customer types set up, QuickBooks is capable of reporting sales data for each type of customer. Underutilized Lists The previous examples of custom fields and customer and vendor types adhered to the basic design intent of each feature and, as such, might not qualify as true workarounds. What if a client needs to track reportable customer-specific information on each sales invoice, and what if that information is never constant for each individual customer? What if, for example, a consulting firm receives orders from the same customer but the sales originate from various regions? Because custom fields and customer and vendor types are, in essence, a set once and forget feature, they are not suitable for tracking constantly-changing information. A drop-down window that allows the user to choose from a list is the ideal solution for this example. Another benefit of this approach is that a drop-down list is not subject to misspelling, as is the case with a custom field. The Ship Via list, generally unutilized in consulting practices, is one recommended workaround. 141

148 1. To set up the feature, customize a sales invoice so that region appears as a dropdown window that the user chooses from (or adds to). Change the Ship Via label to read Region, 2. Click the Lists menu to access the Ship Via list and set up each region. 142

149 3. The user is now able to select the region for each individual sales invoice. Sales tax items, groups and codes Your roster of clients may include charities and not-for-profit organizations that make use of CRA s GST rebate. In addition, most small businesses incur expenses where sales taxes are only 50% refundable. Set up a unique tax code to track these situations. This section explains how. 1. Assume your client s bookkeeper records a credit card charge for meals and entertainment. Item Cost of Meal $100 GST $ 5 PST $ 8 Gratuity $ 10 Total $ 123 Amount 143

150 2. To claim 50% of the GST, create a sales tax item, called GST-Meals and set the rate to be ½ of the GST rate in effect for the subject jurisdiction (6.5% for Nova Scotia, New Brunswick Newfoundland, 2.5% for the rest of Canada). 3. Next, create a second sales tax item labelled GST Meals ND (where ND denotes nondeductible). This sales tax item has the characteristics of a provincial sales tax and has the same rate as the GST rate for the GST Meals tax Item. 144

151 4. Create a sales tax group that combines the two tax items just set up and adds the applicable provincial sales tax. 5. Finally, set up a designated sales tax code. 145

152 6. Record the credit card charge as illustrated below (making sure to break out the gratuity). 7. Click the transaction s journal icon (or press CTRL + Y on your keyboard) to open the underlying journal entry and to verify the allocation of the GST and total expense. 146

153 Other sales tax workarounds Sales tax items and codes make it possible to create a wide array of workarounds. In fact, you will find more suggestions for workarounds at QuickBooks AdvisorAdvantage website. AdvisorAdvantage is a monthly newsletter written by QuickBooks advisors for QuickBooks advisors. To read AdvisorAdvantage, visit quickbooks.ca, click the I m an Accountant link and login to the ProAdvisor portal. The following sections describe two examples of sales tax workarounds available from AdvisorAdvantage. Multicurrency Lite Workaround Look for the September 2008 issue to learn how to account for multicurrency transactions with sales taxes. Making Sales Taxes Work for You The May 2008 issue features an in-depth discussion of how to use sales taxes to automatically calculate everything from landed costs to commissions or royalties payable. Note: AdvisorAdvantage is a free newsletter available only to QuickBooks ProAdvisors. See Chapter 9 for more information on the ProAdvisor program. Using forms for special adjustments Chapter 4 cautioned against using journal entries for payroll or inventory adjustments. In cases where clients use outsourced payroll services but still need to allocate payroll to specific jobs or departments, or when a client needs to adjust inventory quantities while in multi-user mode, consider modifying and using a form. This section describes how. Assume that a user, in multi-user mode, is finalizing period-end inventory values. Chapter 4 briefly introduced the Adjust Inventory window specifically designed for this purpose. However, this feature is deactivated when in multi-user mode. Rather than ask every other user to exit QuickBooks, try this workaround instead. 147

154 1. Set-up a bank account called Item Adjuster. Once the account is created, use the Write Cheques window to make quantity changes to the inventory on hand. 2. On the Items tab, enter the quantity increase or decrease for each item. 148

155 3. Use an expense account on the Expenses tab of the same cheque to enter the cost of the inventory adjustment. Note that the cheque amount is zero. 4. Record the cheque then review the underlying journal entry to confirm that QuickBooks debits the expense account and credits inventory. 149

156 5. Finally, review the Inventory Report Detail to verify the reduction in inventory quantities. Using items in workarounds Like sales taxes, items offer enough flexibility to be used in a workaround. Here is one example. Assume you advise a client to include labour in a product s unit cost. After some analysis, you deem that an hour s worth of labour costs $12.50 and that a particular finished product (a whistle) takes one hour to manufacture. 1. To add labour to an item s cost, first create a vendor called Internal Labour. 150

157 2. Create an item called Labour and select Inventory Part as the item type. Enter the deemed labour cost in the Cost field. 3. Create a second inventory item selecting Assembly as the type (note this requires QuickBooks Premier). 151

158 4. To allocate the labour component to the item, enter a bill for the quantity of labour hours. 5. After assembling all finished products, a review of the Inventory Valuation report reveals the existence of 6 labour hours in stock. 152

159 6. To write off the excess hours, credit the Internal Labour vendor as illustrated below. 7. Finally, notice that the A/P Aging Summary shows a payable to Internal Labour. 153

160 8. To write off the payable, create a second credit to Internal Labour that credits the account originally debited when the production employees were paid. Reports One of the established principles of internal control (not to mention prudent management) is the continuity of document numbers. To verify that all pre-numbered cheques are tracked, QuickBooks provides a Missing Cheque report. You can find this report by selecting Banking under the Reports menu. A creative workaround exists by using the report to verify the continuity of other documents such as sales invoices. 1. To search for missing invoices, run the Missing Cheques report, and when asked for the account, select Accounts Receivable. 154

161 2. QuickBooks then returns a list of all invoices and highlights any missing document number. Using third-party applications In addition to workarounds, QuickBooks users have access to a wide range of third-party applications (also called add-ons). To view all available add-ons, visit the Intuit Marketplace at Are add-ons right for your client? Consider these factors: add-ons tend to be a more costly solution add-ons require more maintenance and attention add-ons may need to be replaced with the release of new QuickBooks versions For example, consider a client requiring inventory tracking by location. A workaround would involve revising item numbers so that a leading character denotes the item s location. Another workaround might be the implementation of item custom fields that are used to indicate location. 155

162 Of course, another strategy involves bypassing workarounds and looking to the Intuit Marketplace for a more sophisticated solution. In our example, and inventory add-on will offer more features and flexibility such as including warehouses as a variable but will cost more. Navigating the Intuit Marketplace The following example shows how to locate an inventory solution in the Intuit Marketplace. 1. Access the marketplace website at 2. Select the By Industry tab and select Wholesale/Distribution from the drop-down list. 3. Select Canada and the client s QuickBooks version in the Compatibility field. Click Search. 4. In the Wholesale/Distribution window, select the type of application and click Search.. 156

163 Another option is to select By Business Need as the search parameter. 1. Access the marketplace website at 2. Select the By Business Need tab and select Inventory and Order Management from the drop-down list. 3. This allows you to further define the search by using checkboxes to indicate the type of application you need. Click Search by Features and review the add-ons matching the given requirements. 157

164 4. Click a product s Learn More link to see additional information. Note that each add-on candidate has received a Customer Survey Score and has been designated as either a Gold or Silver product. These designations indicate that the product has passed a QuickBooks Technical Review, but the Gold designation further denotes that the add-on has scored well on customer surveys and has had customer case studies reviewed. The Learn More link also reveals the following crucial information: 158 the developer s web site a product overview user reviews and ratings case studies technical specs frequently asked questions (FAQs) the availability of demos or trial versions

165 Other add-on resources Navigating the Intuit Marketplace can be daunting and so can working with add-on products. Fortunately, the following web-based resources assist with the task of locating the ideal QuickBooks add-on: In addition, yahoo.com hosts groups that may provide insight into a potential add-on. Bear in mind, though, that participants of these groups are primarily based in the United States. A list of add-on groups includes: QBSP or QuickBooks Service Providers QB Tech or Association of QB Technologists Sleeter Group Note that some of the above groups are public and therefore free, whereas some may require a membership fee. Supporting your clients via remote access QuickBooks Premier Accountant incorporates a feature called Remote Access. Found under the Accountant menu, this tool allows you to either view or assume control of your client s file over an internet connection. 159

166 1. Click Remote Access under the Accountant menu and, if not already registered, click Register for Remote Access. 2. Upon registration and approval, the QuickBooks Remote Access page will display. 160

167 Remote Access works in two ways: unattended access of a QuickBooks file, where the QuickBooks consultant does not require a user at the computer where the QuickBooks file is located attended access, where the consultant is granted permission to remotely access the file from the file s owner who is in attendance and monitors the remote access. Note: The remote access subscription is free to QuickBooks advisors in the first year. Chapter summary This chapter reviewed QuickBooks workarounds and add-ons and covered: examples of workarounds how to navigate the Intuit Marketplace 161

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169 This chapter discusses the features, reports and integration capabilities that QuickBooks offers to the accounting professional at fiscal year end. In this chapter, you will learn:: the features and scope of the Accountant s Copy how QuickBooks works with, and reports on, adjusting journal entries the Audit Trail and other exception reports how QuickBooks works with Caseware and ProFile The Accountant s Copy Clients using QuickBooks are able to create a special, duplicate copy of their file (called an Accountant s Copy) that allows them to keep working in their company file while you work in the accountant s copy they send you. When you finish working in an accountant s copy, you send it back to the client who then imports your changes into his or her company file. 163

170 Note: Only QuickBooks Premier Accountant Edition and Enterprise Solutions Accountant Edition allow you to open accountant s copy files and create and modify information in those files. The dividing date Before your clients create an accountant s copy, they must determine a dividing date. It is this date that separates the tasks an accountant performs in the duplicate copy and the transactions the client can record in the original QuickBooks file. In most cases, the dividing date is the fiscal year end date. Note that, while you work in the accountant s copy, your clients cannot record or edit any transaction dated before the dividing date. They may, of course, continue posting current day-to-day transactions and they are also able to run reports prior to the dividing date. Refer to the table below for an overview of what a client and an accountant can and cannot do with the Accountant s Copy, but bear in mind that many tasks continue to be limited by the dividing date. Add new transactions after the dividing date 164 Task Accountant Client Add, edit, and delete many types of transactions dated on or before the dividing date Add to the chart of accounts Edit accounts or make accounts inactive Add new customers, vendors, and items (some exceptions apply) Make general journal entries Add, edit, or delete payroll transactions, payroll items, or employee payroll information Edit or delete transactions dated after the dividing date Edit existing customer, vendor, or item records Delete existing list entries Reconcile accounts (accountants can reconcile accounts, but the changes are not sent back to the client s master file)

171 Creating an accountant s copy 1. Your clients start by clicking the File menu, and selecting Accountant s Copy > Create Accountant s Copy. 2. QuickBooks opens the Overview window, which summarizes the process for creating an Accountant s Copy. Click Next. 3. In this window, enter a dividing date and click Next. 165

172 4. Select a location to save the file and click Save. Note the.qbx file extension. 5. When QuickBooks confirms the file was successfully created. Click OK. 6. Ask the client to copy the saved file to a CD or other removable media, or it to you. Converting the Accountant s Copy When you receive the client s file, it will arrive in a compressed format (.QBX). Before using it, you must convert the file into a different (.QBA) format. 166

173 1. From the File menu, select Accountant s Copy > Convert Accountant s Copy Transfer File. 2. This window explains what an accountant can and can t do with the accountant s copy. Click Next to begin converting the.qbx file. 167

174 3. Find the file s location and click Open. 4. When QuickBooks indicates it will convert the.qbx file, click OK to continue. 5. Select a location to save the converted.qba file and click Save. 168

175 6. After QuickBooks converts the file, click OK. Exporting and sending changes to the client Once you have made the required changes and posted all necessary adjusting entries, return the accountant s copy to the client. 1. Click the File menu and select Accountant s Copy, View / Export Changes for Client. QuickBooks opens the Accountant s Changes window which allows you to expand or collapse the changes made to the file. You can also include a note for the client. Click Export to continue. 169

176 2. Select a location to save the file and click Save. 3. Click OK to close the confirmation window. To complete the process, send the file to the client. Importing the accountant s changes When the client receives the accountant s changes, she must import them into her QuickBooks company file. 1. Instruct the client to click the File menu, select Accountant s Copy and click Import Accountant s Changes. Browse to the file s location and click Open. 170

177 2. QuickBooks opens the Accountant s Changes window, which the client reviews by clicking the expand icon next to each entry. To start the transfer, click Import. 3. After backing up the file, QuickBooks shows the results of the import. The client should review this window for any warnings then click Close to complete the process. Note: Because the accountant s entries in the Accountant s Copy are Adjusting Journal Entries, it is recommended that the accountant receives the appropriate client approvals. Making and reviewing adjusting journal entries Accounting professionals using the QuickBooks Premier Accountant Edition have the option of labelling any journal entry as an Adjusting Entry, as show in the graphic below. 171

178 By labelling journal entries this way, you can track all adjustments via the Adjusted Trial Balance or the Adjusting Journal Entries report (both found under the Accountant & Taxes section of the Reports menu). The image below shows how the adjusted trial balance displays an Adjustments column listing all adjusting entries. 172

179 Additionally, the Premier Accountant Edition incorporates a Working Trial Balance (found under the Accountant menu) that displays the accounts pre- and postadjustment and that also accommodates an area for working paper references. Working with the Audit Trail Found under the Accountant & Taxes section of the Reports menu, the always-on audit trail lets you see changes made to all existing or deleted transactions. Changes or deletions to transactions are italicized and bolded, and the report also prominently displays the individual who posted the original and changed transaction. 173

180 Regrettably, filtering the audit trail produces limited results. If you seek information about a particular user, export the report to Excel and use the Find feature to locate all changed entries by a user. For example, to display all transactions entered by the user Peter, enter the criteria in Excel s Find What field and click Find All. Excel then displays all transactions entered, modified or deleted by Peter. 174

181 As introduced in Chapter 5, an alternative way of working with audit trail is to export it from QuickBooks with the Auto Filtering option found on the Advanced tab. With Auto Filtering on, the ability to sort by user in the Entered/Last Modified column of the Excel worksheet simplifies the task of locating entries by each user. Other ways of finding changed information Two additional reports are beneficial in the examination or review of a QuickBooks files. These are: the Voided/Deleted reports the Closing Date Exception report 175

182 The Voided/Deleted reports This report (available in either summary or detailed versions) provides insight into voided or deleted transactions within a specified date range. The voided/deleted reports pull data from the audit trail and are grouped by the user who completed the transaction. The Closing Date Exception report This report displays all transactions made (or changed) after a closing date is set. To find this report, click Reports > Accountant & Taxes. Working with Caseware Caseware Working Papers, an application used by accountants in public practise, assists in the preparation of financial statements by importing raw accounting information from QuickBooks. There are two ways of transferring QuickBooks financial data into Caseware. 176

183 Method 1 The CaseWare Export Utility 1. In CaseWare, and with the QuickBooks company file open, select CaseWare QuickBooks Export Utility. 2. This utility then requests the QuickBooks file s version number and an export path (the exported file s location). If you are accessing the QuickBooks file for the first time, QuickBooks presents an Application Certificate. 3. Select Yes, whenever this QuickBooks company file is open, and click Continue. 4. Click Done. 177

184 5. From CaseWare, select File > Import Accounting and complete the dialog box as illustrated below. It is important that the import path is the same as the export path specified by the CaseWare QuickBooks Export Utility. 6. You have now imported a QuickBooks company file into CaseWare. Method 2 Using Excel The method requires some simple Excel skills. One benefit of this feature is that it works with older versions of QuickBooks. 1. In QuickBooks, generate a Trial Balance report and click Export. 178

185 2. When QuickBooks opens the Export dialog box, select CSV as the file type. 3. After QuickBooks exports the report to Excel, open the Excel file and delete the first and last two 2 rows of the file. 4. Widen the columns so as to permit easier viewing. 179

186 5. Highlight columns B and C and click Insert > Columns. This action allows you to split the account numbers and account descriptions which, during export, were placed in one column. 6. Still in Excel, select the first column and click Data, Text to Columns. 7. In the dialog box (labelled Step 1 of 3), select Fixed Width and click Next. 8. In the dialog box (labelled step 2 of 3), remove any arrows or lines that do not divide any text or figures. 180

187 9. Widen any column (by dragging the columnar lines) so that the columns capture all of the cell s information. 10. For example, the line referred to above needs to be moved to the right so that it includes the 0 in the first row (as illustrated below). 11. Click next and scroll down the window to ensure that all columns are properly aligned.if all is in order, click Finish. The file will look like this: 12. Delete Column B above. 13. Because of sub-accounts, Excel lists duplicate numbers in column A. Renumber all duplicate accounts. 181

188 14. Save the file in CSV format and close it. 15. Open CaseWare and select File, Import, Excel File. 16. Set filters to All files types so that CaseWare displays CSV files. Select the desired file and click Open. 182

189 17. Click Next at the bottom of the window. 18. Click Next on the Specify Data Properties screen (not illustrated). 19. In the Field Details screen, right click on the column labelled Ignore and select Select Account Details >Account Number. 183

190 20. In the Field Details screen, right-click on the next column labelled Ignore and select Account Details > Account Description. 21. Scroll to the first column of figures labelled Ignore and right-click on Balances > Current Year Balance > Opening Balance. Check the Debit Field radio button. 22.Right-click on the last column labelled Ignore, select Balances, Current Year Balance and Opening Balance. Check the Credit Field radio button. Click Next. 23. Click Next in the Advanced Specifications window. 184

191 24.To complete the process, click Import on the Completing Excel Import Wizard window. You can now work with the financial data in CaseWare. 185

192 Working with ProFile Of interest to tax and accounting professionals, Intuit Canada publishes a tax preparation application called ProFile. With a proper account setup in QuickBooks, you can export financial data directly to ProFile. Assume a client uses QuickBooks for her incorporated company. A quick peek at the QuickBooks Company Information window should confirm the fact. With T2 selected in the Company Information window, QuickBooks includes a field for every account that assists in seamlessly populating the GIFI (General Index of Financial Information) schedules of a T2 corporate income tax return. 186

193 When preparing a client s corporate return, ensure the chart of accounts in the company file is complete. It is not uncommon, for example, to receive a client file with incomplete GIFI mappings (see the Tax Line column below). To facilitate integration with ProFile, ensure all the tax lines are successfully mapped. 1. Double-click each account s tax line (on the Account Listing report) and add the GIFI code in the Account window that opens. 2. Once all accounts are assigned a GIFI code, the file is ready to work with Profile. Exporting to ProFile It is essential that the QuickBooks company file be the only QuickBooks company file open on the computer where ProFile is running. 187

194 1. With a blank T2 file open in Profile, select QuickBooks Import. 2. In the Taxlink Setup dialog box that opens, enter the corporation s fiscal year information. Click Continue. 3. Click the Unlinked tab and ensure that there are no accounts that have not been linked to a GIFI Code. 188

195 4. Click Import and ProFile will advise of the number of accounts imported. In ProFile, review the S100 and S125 schedules to confirm their accuracy. 189

196 For a quick spot-check, select ProFile s Auditor and click the RSI tab. The auditor will warn you if Assets do not equal Liabilities plus Shareholder s Equity an obvious indicator of the existence of errors. Tip: It is not uncommon for a practitioner to receive a copy of a QuickBooks data file with no GIFI codes in the chart of accounts. The preparer will expend effort in populating the chart of accounts with GIFI codes for integration with Profile, only to have this information not be imparted back to the client. The solution is to export the chart of accounts list to an IIF (Intuit Interchange Format) file for the client to import into the original company file. This will populate the original client company with the correct GIFI codes for future use. Chapter summary This chapter reviewed what you can do with QuickBooks at year end. The concepts covered in this chapter included: the Accountant s Copy adjusting journal entries and trial balance reports the Audit Trail and other exception reports 190

197 Maintaining an effective QuickBooks company file takes more than sound accounting and bookkeeping practices. To ensure data integrity, you also need to periodically verify and safeguard the file. And, should the file become damaged or unstable, you need tools and resources for diagnosis and repair. In this chapter, you will learn: to verify and rebuild a company file to access and interpret the QBwin.log file the distinction between a backup and a portable copy to find additional resources for data file maintenance Verify and rebuild If, during a QuickBooks session, a client experiences any of the following issues, you will want to check the file for damage by using the methods described in this chapter: errors such as Invalid Protection Faults or Fatal Errors a message containing the value C=88 or C=43 when trying to open a company file discrepancies on reports, for example, invoices or bills that are posting with a negative value 191

198 deposited amounts still appearing on the Payments to Deposit window balance sheets not showing all accounts names missing from lists Verify data 1. From the File menu, choose Utilities > Verify Data. 2. If QuickBooks displays the following window, the data is clear. 3. If a data file has lost integrity (due to power failures, faulty hard drives, etc.) QuickBooks displays this message. 192

199 Rebuild data In those rare instances that QuickBooks reports a data error, click File > Utilities > Rebuild Data. 4. Before rebuilding the data, QuickBooks will prompt you to backup the file. After completing the rebuild process, you should see this window. 5. Select File > Utilities > Verify Data again to ensure the data error is resolved. If QuickBooks reports no problems with the data, the Rebuild Data function has corrected the problem. If the error message persists, additional procedures, such as a call to the QuickBooks technical support team, are required. In addition, try viewing the QBWIN.LOG file. The QBWIN.LOG File In some cases, the loss of data integrity can be traced to a bad transaction. 1. To view possible transaction errors, press CTRL

200 2. QuickBooks opens the Product Information window. In addition to viewing details about the application and data file, you use this window to launch the Tech Help window. 3. Press CTRL 2 to launch Tech Help, then click the Open File tab. 194

201 4. To view details of the damaged company file, select and open the QBWIN.LOG file 5. Search the QBWIN.LOG file for error references. Any errors found by QBWIN.LOG are listed between the Begin Verify Log and End Verify Log sections of the report. In the example shown below, the errors refer to item mismatches one part of the data file indicates a certain quantity value for an inventory part, whereas another part of the data file indicates a different quantity value for that inventory part. This type of error, unfortunately, is not easily repaired and it s therefore recommended to either restore an undamaged backup or send the corrupt file to Intuit s Data Recovery department. Errors more likely to be repaired without the assistance of Intuit s Data Recovery team generally refer to a specific transaction type, date and transaction document number. These errors need to be located in the company file and corrected. Typically, the 195

202 correction involves deleting the transaction and then re-entering it. If you cannot locate or correct the reported errors, contact Intuit s Data Recovery team at (877) Safeguarding company files To safeguard QuickBooks data against accidental loss, instruct your clients to make an ongoing, routine backup of the company file. Because the process of backing up a file is well documented in QuickBooks itself, this section limits the discussion to a suggested backup routine. Backup all files at the end of each session. Backup to a network drive, external hard drive or a removable storage device such as a CD, USB flash drive or Zip disk. Consider using QuickBooks Online Backup to store client files on a remote site What s the best way to back up files? The best way to back up files is to have QuickBooks automatically backup when it closes a file. 1. Click the File menu and select Save Copy or Backup. Choose Backup copy and click Next. 196

203 2. Select Local backup and click Next. 3. Select Only Schedule Future Backups and click Next. 4. Check the Backup Automatically box and enter 1 in the Times field. Click Finish. QuickBooks will now backup whenever the file is closed. 197

204 Tip: QuickBooks technical support recommends regularly running Verify Data. It s easy to incorporate this utility as part of the backup routine. Just click the Options button from the backup window and select Complete Verification. The portable copy Starting with its 2008 version, QuickBooks backup files are larger than in previous versions. Using a portable company file is a good alternative to sending backup files. The portable company file (.QBM) is small enough to be sent by or saved to smallcapacity portable media. A portable copy differs from a backup in that the latter contains everything a user needs to re-create the company file, including additional customized features such as templates and letters and other tools such as the Financial Statement Designer and Loan Manager. The portable copy does not contain all these customized settings and tools, it only copies the client s financial data. Note that the portable copy does not function like the Accountant s Copy. Changes or updates made to a portable copy cannot be merged with the original company file. 1. Create a portable copy as you would a backup. Click File >Save Copy or Backup > Portable Copy as the file type. 198

205 Managing large files Chapter 2 explained that QuickBooks puts no limits on the number of fiscal years contained within a file. For high-volume clients, this might present a problem in that the company file may become large enough to degrade system performance. If degradation becomes an issue, consider the following options: Create a new company file. As illustrated in Chapter 3, exporting all required lists to the new file and inputting opening balances will result in better system performance. Since manually inputting opening balances can be a timeconsuming task, consider using a commercially available tool to minimize the effort required in transferring opening balances and any transactions subsequent to the cut-off date. Visit for more information. Upgrade to QuickBooks Enterprise Solutions (QBES). The benefits of QBES include: 20-user limit (as opposed to the 5-user limits imposed by the Pro and Premier editions of QuickBooks) greater list capacity (generally 1 million vs. 14,500 for QuickBooks Premier or Pro) greater user flexibility and security Chapter summary This chapter reviewed QuickBooks data file maintenance and touched on: using Verify and Rebuild to maintain data integrity using QBWIN.LOG to repair a file distinguishing between backups and portable company files options for increasing performance due to larger file sizes 199

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207 Now that you have attended the QuickBooks Experts Course, and with the help of this training document, you the accounting professional have the knowledge to successfully set up, work with, and troubleshoot a client file. You are also able to use the material illustrated in this manual, and explained in the training course, to process a client s fiscal year end. Support resources and ongoing skills development are, for all professionals, a critical ingredient for success. Your and your staff s knowledge of, and comfort with, QuickBooks is no different. In this light, consider the following resources available to both the accounting professional and the general QuickBooks user. In-product help Click the Help menu for fast, easy answers to your processing questions. Or better yet, use the Question field that s available from any form s title bar. 201

208 The ProAdvisor program Join the QuickBooks ProAdvisor program to receive the following valuable benefits: 202 a copy of QuickBooks Premier Accountant Edition 2009 a copy of QuickBooks Premier Multicurrency Edition a copy of QuickBooks Enterprise Solutions Accountant Edition all above software includes QuickBooks Payroll priority technical support Free listing on QuickBooks Find-an-Expert referral website advance notice of product updates and promotions free subscription to AdvisorAdvantage newsletter (a monthly newsletter written by ProAdvisors for ProAdvisors) access to the members-only ProAdvisor website access to free instructional webinars For more information on the ProAdvisor program, visit and click the For Accountants link. Support Centre Visit for a list of all available support options, including Intuit s Technical Support team. And remember that when you enroll in the ProAdvisor program, priority technical support is just one of the program s benefits. Online communities Available from online communities offer a way for users to ask questions and get answers. These user-driven forums delve into comprehensive discussions on QuickBooks, QuickTax and ProFile tax software. QuickBooks training The Experts course you attended is but one in a series of ongoing, full-day instructional sessions. For additional, in-depth QuickBooks knowledge, you, your clients, or your staff may want to attend one of the following QuickBooks training sessions: QuickBooks Basic Training is great for beginners and for those who want to hone their basic skills QuickBooks Advanced Training is designed for more experienced users and it builds on the material learned in the Basic session QuickBooks Payroll Training is meant to teach you, in one day, everything from payroll setup to advanced payroll processes. For more information on all the QuickBooks training session, visit and click the Products & Services link. Professional tax software ProFile is time-saving tax software for tax and accounting professionals. ProFile tax software is available for practitioners providing personal, corporate and trust returns

209 while Forms Expert is an interactive CRA forms library that lets a practitioner prepare almost any form that a full-service practice requires. Visit for more information or to download a trial copy of ProFile. If you are a ProFile user and require support, start by visiting a wide selection of online support options. Experience is the best teacher No matter the application, trial and error is always a great way to learn. We encourage you to use the QuickBooks sample files (or to set one up) and go ahead and experiment. If you don t know what something does, try it out! If you re not sure about a function, practice on a sample file, and then use the knowledge you gained to work in your own, or your client s company file. We know that as you continue to work with QuickBooks, its flexibility and power will continue to impress you. Happy accounting! 203

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211 General Information Business Name: Address: Phone Number: Fax Number: address: Website: New or Existing Business: New Existing If new, what is the start date? If existing, when did business start operating? Business status (Corporation, Proprietorship, Charity, et.) What is the fiscal year -end (month and yeart)? For what month does the client want to start recording transactions? Business description (retail, consulting, construction, non-profit, manufacturing, etc) Business Number: Is business registered for GST, PST, QST, HST or other tax (List all taxes and account number.) 205

212 Business Name: List dates of each last-filed tax return: Is business currently using another accounting package or other automated system? If so, describe the current system. (Identifies whether to import accounts, vendors, suppliers, etc. Are opening balances for accounts receivable, payable, trial balance and payroll information available? YES (Obtain a trial balance or financial statement, payroll, accounts receivable & accounts payable balances) NO (Opening balances to be obtained and entered after year-end, or period-end, engagement is completed) Is there a business bank account? (If so, obtain bank statement and bank reconciliation) Is there more than one Canadian Dollar bank account? (If so obtain bank statement or bank reconciliation) Does client have an existing chart of accounts? YES (If so, obtain copy for review) NO (Use and modify standardized chart of accounts) Does the business buy or sell in foreign currencies? If so, list the currencies? Are there separate bank accounts for these currencies? (If so obtain bank statement and bank reconciliation) Is multi-currency required? (If so set up using Premier: MultiCurrency Edition) Describe who will be using QuickBooks (This identifies need for usernames and passwords). 206

213 Note: For up to 5 users, implement QuickBooks Pro or Premier. For more than 5 users, implement QuickBooks Enterprise Solutions. What does client intend to use QuickBooks for? Tracking sales invoices? 1. Bill for time? Yes No 2. Bill for services? Yes No 3. Bill for products? Yes No 4. Is an items list available? Yes No 5. Are Sales Orders required? Yes No (If so implement QuickBooks: Premier Edition) Sending customized sales and purchase forms? Summarizing sales from Point of Sale or other invoicing system? (If so, determine if other system exports electronically to QuickBooks) Tracking Inventory? 1. How many are stocked? 2. Part numbers established? Yes No 3. Inventory Quantities available? Yes No 4. Inventory Assembly needed? Yes No 5. Units of Measure required? Yes No (If Yes to 5 or 6, implement QuickBooks: Premier Edition) Paying employees? (Obtain employee contact information, historical remuneration, current pay rates, company employment policies and remittances) Tracking credit card purchases? List the credit cards used in the business Preference Requirements Numbered accounts required? (If so enable Use Account Numbers) Tracking multiple jobs or departments? (If so enable Class Tracking) Prior fiscal year closed? (If so enable Closing Date) Levying finance charges to late-paying customers? (If so, enable Finance Charges) Issuing purchase orders? (If so, enable Inventory and PO) Preparing customer Proposal or Quotes? (If so, enable Estimates) Preparing and tracking payroll? (If so enable Payroll and obtain employee contact information remuneration history) Printing cheques? (If so, explain available cheque forms) Tracking expenses subsequently billed to your clients? (If so explain Billable Time & Costs) Assigning discounts on selling prices to different customers? (If so, enable Price Levels) Sending out customer Statements? (If so, explain feature) Importing bank transactions from bank s website? (If so, explain online banking). Tracking employee time with timesheets? (If so, enable Timesheets). 207

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215 QuickBooks and multicurrency A client that actively transacts in more than one currency and needs QuickBooks to calculate and track the exchange rates on those transactions must use the QuickBooks Premier Multicurrency Edition. This edition lets your clients buy or sell in an unlimited number of foreign currencies at an estimated exchange rate and then lets them automatically calculate the realized or unrealized foreign exchange gain or loss. Enabling multicurrency 1. To use multicurrency, click Edit > Preferences, and highlight the Accounting icon. 2. Click Company Preferences and check the Use multicurrency box. Note you must also set the home currency (Canada is the default setting). 209

216 3. QuickBooks advises that multicurrency, once enabled, cannot be turned it off. To turn on multicurrency, click Yes. 4. After enabling multicurrency, QuickBooks adds Currency to the List window. From the menu bar, click Lists and choose Currency List. By default, the Currency List only displays a limited number of currencies. To view the complete list, click the Show All checkbox and QuickBooks displays all currencies that are set up (not illustrated here). 5. Review the foreign currency s default exchange rate as set up by QuickBooks. If it appears too high (or too low), double-click the currency to edit its rate. 6. In the Edit Currency window, enter the new default rate in the Exchange Rate field. Click OK to close the window and return to the Currency List. 210

217 7. Tip: You can get up-to-date foreign currency rates directly from the Bank of Canada s website without leaving QuickBooks. From the Currency List, click the Currency button then click on Download Current Exchange Rates. Setting up foreign currency customers 1. From the Lists menu, select Customer:Job List. Notice that, with multicurrency enabled, QuickBooks now displays each customer s currency. 2. Press CTRL + N to set up a new customer. 3. Use the Currency drop-down in the New Customer profile window to select that customer s currency. 211

218 4. After selecting a currency from the customer window, QuickBooks checks that a corresponding foreign currency Accounts Receivable account exists. If it doesn t, QuickBooks ask you to creates one. 5. Type a name for the AR account and notice that QuickBooks automatically selects United Sates of America as the currency. Click OK to close the New Account window and click OK once more to save the new customer setup. Selling in a foreign currency 1. From the Customer menu, choose Create Invoice and enter Stars & Stripes in the Customer:Job field. Because this invoice is for a US customer, QuickBooks immediately selects the USD Accounts Receivable account and indicates that the invoice total (and balance owing) is calculated in United States dollars. 212

219 How does QuickBooks calculate the item s rate or selling price? 1. Open the item s profile window by clicking Lists > Item List and double-clicking the Troubleshooting item. The window reveals that the selling price (in Canadian dollars) is $50. QuickBooks calculates the US price by dividing the selling price by the exchange rate. 213

220 2. To set a default U.S. selling price for each item, click the Edit menu and select Preferences. Choose the Accounting icon and click Company Preferences. Check the box called Use foreign prices on items, and enter a currency in the Foreign item currency drop-down field. 3. Return to the Troubleshooting item s profile window and notice that a Foreign Rate field now appears. Enter the default amount, in US dollars, that foreign customers will pay for this item. Click OK to save the change and close the window. 214

221 Using foreign prices on invoices Create an invoice for Stars & Stripes and select the Troubleshooting item by clicking Lists > Item List and double-clicking the Troubleshooting item. The foreign price will now appear on all US client invoices. Depositing a foreign payment to a Canadian bank account Assume your client receives a US customer s cheque (denominated in US dollars) and deposits it into a Canadian dollar account. Remember that the currency exchange rate at the time of invoicing was Assume that, on the day your client deposits the cheque, the exchange rate fell to From the Customer menu, click Receive Payments. Fill in the Received From field, entering the date and the amount (in US dollars) of the payment. 2. Enter, in the exchange rate field, the rate (1.015) the bank charged for that deposit. Click Save & Close to record the deposit. 215

222 3. Because you adjusted the Exchange rate, QuickBooks asks if it should update the default exchange rate. Click No. 4. Whenever a customer payment is recorded at a rate different from the invoice, QuickBooks automatically calculates the foreign exchange gain or loss. To view the underlying journal entry and the calculated gain or loss on the deposit, display the customer payment window. Use the previous arrow to find the payment then click the Journal icon. Note the gain/loss as calculated by QuickBooks. Setting up foreign currency vendors If a client buys from a foreign vendor (for this example, assume in Euros), first revisit the Currency List to ensure the default rate is adequate. 1. From the Menu bar, click Lists and choose Currency List. To adjust the exchange rate, double-click Euro and enter a new exchange rate. Click OK to save the change and close the window. 216

223 2. To set up the vendor, click Lists > Vendor List then press CTRL + N to open the New Vendor window. Enter the vendor s contact information and select Euro as the vendor s currency. 3. Because you transact with this vendor in Euros and because a Euro Accounts Payable account is not set up QuickBooks creates a foreign currency A/P account. 4. Enter a name in the New Account window, and click OK to close the window. 217

224 Recording a foreign purchase 1. From the Vendor menu, click Enter Bills. 2. Enter the vendor s name and notice that QuickBooks chooses the correct accounts payable account and that it indicates the transaction is in Euros. 3. Click Save & Close to record the transaction. Where does QuickBooks get the cost? As with the selling price or rate on a customer invoice, QuickBooks calculates the cost by taking the amount entered in the cost field of the item s profile window and dividing it by the exchange rate. You can override the cost so that it matches the actual amount charged by the vendor. Tip: Unlike a selling price, you cannot set a foreign cost price for any item that you set up. The A/P Aging Summary report 1. Click Reports, Vendors & Payables then A/P Aging Summary. 2. This report shows that QuickBooks translates the purchase of 10,122 Euros into $15,000 Canadian dollars. 218

225 Paying a foreign vendor 1. From the Vendor menu, click Pay Bills > Euro Accounts Payable account. As with customer payments, if you know the actual exchange rate when you make the payment (for example, if paying by bank draft), enter it in the exchange rate field. 2. Click Pay & Close to record the payment and close the window. 3. As with the foreign customer example, QuickBooks records the difference in exchange rates in the Exchange Gain/Loss account. 219

226 Multicurrency bank accounts If a client has a foreign currency bank account, specify the currency in QuickBooks when you set up the account. For example, assume that your client has a US dollar account. 1. To set it up, click the Lists menu, select Chart of Accounts then press CTRL + N to open the New Account window. 2. Enter the account name and select United States of America in the Currency field. Click OK to close the window. Tip: You don t have to designate a currency for every type of account that you set up. The only types of accounts that require a foreign currency designation are Bank Accounts Receivable Accounts Payable Credit Card Making deposits or paying bills from a foreign bank account The process for receiving customer payments or paying vendor bills to or from a foreign bank account is the same as described earlier in this chapter, with the exception that you do not change the exchange rate. The reason for this recommendation is that for any amount held in a foreign currency account, the Canadian dollar value of those accounts constantly fluctuates. In fact, the actual Canadian dollar amount will only be known 220

227 when you physically convert the funds into Canadian dollars (as in the following example). Transferring funds between Canadian and foreign currency accounts 1. From the Banking menu select Transfer Funds. Enter the date of the transfer, the Transfer From and Transfer To accounts and the amount of the transfer. Because the exchange rate is known at the point of the transfer, enter the actual rate. 2. Click Save & Close to record the transfer and close the window. Multicurrency at period end At year end (or at another period end), you may have a requirement to recognize your foreign currency balances at the period date s actual exchange rate. For example, assume that your client s year end is May 31 and that the US dollar exchange rate at that date is Review the Balance Sheet below and notice that there are two foreign currency asset accounts: USD bank account with a balance (in Canadian dollars) of $9, USD accounts receivable with a Canadian dollar equivalent of $11,

228 Because these amounts represent transactions that transpired throughout the year, you will have to restate the currency exchange rate as at May 31. To do so, use the Unrealized Gain & Loss report. Unrealized Gain & Loss report 1. From the Reports menu, click Multicurrency > Unrealized Gain & Loss, and click the Yes radio button. 2. For the United States of America Dollar, enter Click OK. 3. The Unrealized Gains & Losses report has three columns: 222 Current balance: displays the value of your foreign currency balances as they

229 appear on the balance sheet Adjusted balance: this column restates the Canadian value of foreign currency balance at the exchange rate you specified Gain/Loss: this amount is the difference between the two columns 4. To restate the balance sheet with the updated exchange rate, click Banking > Make General Journal Entries. Enter the bank account adjustment by debiting that account and crediting Exchange Gain/Loss. 5. Click the box called Home Currency Adjustment. QuickBooks opens a window confirming that you are only adjusting the Canadian dollar equivalent of the US account and not the US account itself. Click OK to return to the journal entry. 6. Click Save & New to record the transaction. 223

230 7. Enter a new journal entry to record the exchange rate loss for the USD Accounts Receivable account. For all journal entries debiting or crediting an A/R or A/P account, you must enter the customer in the Name field. Once again be sure to click the Home Currency Adjustment box. 8. Click Save & Close to record the journal entry. 9. The balance sheet should now reflect the foreign currency exchange rates as at the balance sheet date. 224