Table of Contents

About This Book

How to Use This Book

Foolish Assumptions

How This Book Is Organized

Book I: An Accounting Primer

Book II: Getting Ready to Use QuickBooks

Book III: Bookkeeping Chores

Book IV: Accounting Chores

Book V: Financial Management

Book VI: Business Plans

Book VII: Care and Maintenance

Book VIII: Additional Business Resources

Stuff at my website

Conventions Used in This Book

Special Icons

Book I: Chapter 1: Principles of Accounting

The Purpose of Accounting

The big picture

Managers, investors, and entrepreneurs

External creditors

Government agencies

Business form generation

Reviewing the Common Financial Statements

The income statement

Balance sheet

Statement of cash flows

Other accounting statements

Putting it all together

The Philosophy of Accounting

Revenue principle

Expense principle

Matching principle

Cost principle

Objectivity principle

Continuity assumption

Unit-of-measure assumption

Separate entity assumption

A Few Words about Tax Accounting

Book I: Chapter 2: Double-Entry Bookkeeping

The Fiddle-Faddle Method of Accounting

How Double-Entry Bookkeeping Works

The accounting model

Talking mechanics

Almost a Real-Life Example

Rent expense

Wages expense

Supplies expense

Recording sales revenue

Recording cost of goods sold

Recording the payoff of accounts payable

Recording the payoff of a loan

Calculating account balance

Using T-account analysis results

A Few Words about How QuickBooks Works

Book I: Chapter 3: Special Accounting Problems

Working with Accounts Receivable

Recording a sale

Recording a payment

Estimating bad debt expense

Removing uncollectible accounts receivable

Recording Accounts Payable Transactions

Recording a bill

Paying a bill

Some other accounts payable pointers

Inventory Accounting

Dealing with obsolete inventory

Disposing of obsolete inventory

Dealing with inventory shrinkage

Accounting for Fixed Assets

Purchasing a fixed asset

Dealing with depreciation

Disposing of a fixed asset

Recognizing Liabilities

Borrowing money

Making a loan payment

Accruing liabilities

Closing Out Revenue and Expense Accounts

The traditional close

The QuickBooks close

One More Thing . . .

Book II: Chapter 1: Setting Up QuickBooks

Planning Your New QuickBooks System

What accounting does

What accounting systems do

What QuickBooks does

And now for the bad news

Installing QuickBooks

Dealing with the Pre-Setup Jitters

Preparing for the setup

What happens during the setup

Running the QuickBooks Setup

The big Welcome

The Express Start method

The Advanced Setup method

Supplying company information

Customizing QuickBooks

Setting your start date

Reviewing the suggested chart of accounts

Adding your information to the company file

Identifying the Starting Trial Balance

A simple example to start

A real-life example to finish

Book II: Chapter 2: Loading the Master File Lists

Setting Up the Chart of Accounts List

Setting Up the Item List

Working with the Price Level List

Using Sales Tax Codes

Setting Up a Payroll Item List

Setting Up Classes

Setting Up a Customer List

Setting Up the Vendor List

Setting Up a Fixed Assets List

Setting Up a Price Level List

Setting Up a Billing Rate Level List

Setting Up Your Employees

Setting Up an Other Names List

Setting Up the Profile Lists

Book II: Chapter 3: Fine-Tuning QuickBooks

Accessing the Preferences Settings

Setting the Accounting Preferences

Using account numbers

General accounting options

Setting the Bills Preferences

Setting the Calendar Preferences

Setting the Checking Preferences

Changing the Desktop View

Setting Finance Charge Calculation Rules

Setting General Preferences

Controlling Integrated Applications

Controlling Inventory

Controlling How Jobs and Estimates Work

Dealing with Multiple Currencies

Starting Integrated Payment Processing

Controlling How Payroll Works

Telling QuickBooks How Reminders Should Work

Specifying Reports & Graphs Preferences

Setting Sales & Customers Preferences

Specifying How Sales Are Taxed

Setting the Search Preferences

Setting the Send Forms Preferences

Fine-Tuning the Service Connection

Controlling Spell Checking

Controlling How 1099 Tax Reporting Works

Setting Time & Expenses Preferences

Book III: Chapter 1: Invoicing Customers

Choosing an Invoice Form

Customizing an Invoice Form

Choosing a template to customize

Reviewing the Additional Customization options

Moving on to Basic Customization

Working with the Layout Designer tool

Working with the Web-based Form Design tool

Invoicing a Customer

Billing for Time

Using a weekly time sheet

Timing single activities

Including billable time on an invoice

Printing Invoices

E-Mailing Invoices

Recording a Sales Receipt

Recording Credit Memos

Receiving Customer Payments

Assessing Finance Charges

Setting up finance charge rules

Calculating finance charges

Using Customers Menu Odds and Ends

Book III: Chapter 2: Paying Vendors

Creating a Purchase Order

A real purchase order

Purchase order tips and tricks

Recording the Receipt of Items

Simultaneously Recording the Receipt and the Bill

Entering a Bill

If you haven’t previously recorded an item receipt

If you have previously recorded an item receipt

Recording a credit memo

Paying Bills

Reviewing the Other Vendor Menu Commands

Vendor Center

Sales Tax menu commands

Inventory Activities

Print 1099s/1096

Item List

Book III: Chapter 3: Tracking Inventory and Items

Looking at Your Item List

Using the Item Code column

Using the Item List window

Using the inventory reports

Adding Items to the Item List

Basic steps for adding an item

Adding a service item

Adding an inventory part

Adding a non-inventory part

Adding an other charge item

Adding a subtotal item

Adding a group item

Adding a discount item

Adding a payment item

Adding a sales tax item

Setting up a sales tax group

Adding custom fields to items

Editing Items

Adjusting Physical Counts and Inventory Values

Adjusting Prices and Price Levels

Using the Change Item Prices command

Using price levels

Inventory in a Manufacturing Firm

Manufactured inventory the simple way

Inventory accounting in QuickBooks Premier and QuickBooks Enterprise Solutions

Multiple inventory locations

Book III: Chapter 4: Managing Cash and Bank Accounts

Writing Checks

Recording and printing a check

Customizing the check form

Making Bank Deposits

Transferring Money between Bank Accounts

Working with the Register

Recording register transactions

Using Register window commands and buttons

Using Edit Menu Commands

Reconciling the Bank Account

Reviewing the Other Banking Commands

Order Checks & Envelopes command

Enter Credit Card Charges command

Online Banking command

A few words about online banking

Loan Manager

Other Names list

Book III: Chapter 5: Paying Employees

Setting Up Basic Payroll

Signing up for a payroll service

Setting up employees

Setting up year-to-date amounts

Checking your payroll setup data

Scheduling Payroll Runs

Paying Employees

Editing and Voiding Paychecks

Paying Payroll Liabilities

Book IV: Chapter 1: For Accountants Only

Working with QuickBooks Journal Entries

Recording a journal entry

Reversing a journal entry

Editing journal entries

Updating Company Information

Working with Memorized Transactions

Reviewing the Accountant & Taxes Reports

Creating an Accountant’s Copy of the QuickBooks Data File

Creating an accountant’s copy

Using an accountant’s copy

Reusing an accountant’s copy

Exporting client changes

Importing accountant’s changes

Canceling accountant’s changes

Book IV: Chapter 2: Preparing Financial Statements and Reports

Some Wise Words Up Front

Producing a Report

Working with the Report Window

Working with Report window buttons

Using the Report window boxes

Modifying a Report

Using the Display tab

Using the Filters tab

Using the Header/Footer tab

Formatting fonts and numbers

Processing Multiple Reports

A Few Words about Document Retention

Book IV: Chapter 3: Preparing a Budget

Reviewing Common Budgeting Tactics

Top-line budgeting

Zero-based budgeting

Benchmarking

Putting it all together

Practical Approaches to Budgeting

Using the Set Up Budgets Window

Creating a new budget

Working with an existing budget

Managing with a Budget

Some Wrap-Up Comments on Budgeting

Book IV: Chapter 4: Using Activity- Based Costing

Revealing Traditional Overhead Allocation

How ABC Works

The ABC product line income statement

ABC in a small firm

Implementing a Simple ABC System

How QuickBooks Supports ABC

Turning On Class Tracking

Using Classes for ABC

Setting up your classes

Classifying revenue amounts

Classifying expense amounts

After-the-fact classifications

Producing ABC reports

Book IV: Chapter 5: Setting Up Project and Job Costing Systems

Setting Up a QuickBooks Job

Tracking Job or Project Costs

Job Cost Reporting

Using Job Estimates

Progress Billing

Book V: Chapter 1: Ratio Analysis

Some Caveats about Ratio Analysis

Liquidity Ratios

Current ratio

Acid test ratio

Leverage Ratios

Debt ratio

Debt equity ratio

Times interest earned ratio

Fixed-charges coverage ratio

Activity Ratios

Inventory turnover ratio

Days of inventory ratio

Average collection period ratio

Fixed-asset turnover ratio

Total assets turnover ratio

Profitability Ratios

Gross margin percentage

Operating income/sales

Profit margin percentage

Return on assets

Return on equity

Book V: Chapter 2: Economic Value Added Analysis

Introducing the Logic of EVA

EVA in Action

An example of EVA

Another example of EVA

Some Important Points about EVA

Using EVA When Your Business Has Debt

The first example of the modified EVA formula

Another EVA with debt example

Two Final Pointers

And Now a Word to My Critics

Book V: Chapter 3: Capital Budgeting in a Nutshell

Introducing the Theory of Capital Budgeting

The big thing is the return

One little thing is maturity

Another little thing is risk

Putting It All Together

Calculating the Rate of Return on Capital

Calculate the investment amount

Estimate the net cash flows

Calculating the return

Measuring Liquidity

Thinking about Risk

What Does All This Have to Do with QuickBooks?

Book VI: Chapter 1: Profit-Volume- Cost Analysis

How Profit-Volume-Cost Analysis Works

Calculating Break-even Points

Using Real QuickBooks Data for Profit-Volume-Cost Analysis

Sales revenue

Gross margin percentage

Fixed costs

The Downside of the Profit-Volume-Cost Model

Using the Profit-Volume-Cost Analysis Workbook

Collecting your inputs

Understanding the break-even analysis

Understanding the profit-volume-cost forecast

Looking at the profit-volume-cost charts

Book VI: Chapter 2: Creating a Business Plan Forecast

Reviewing Financial Statements and Ratios

Using the Business Plan Workbook

Understanding the Workbook Calculations

Forecasting inputs

Balance Sheet

Common Size Balance Sheet

Income Statement

Common Size Income Statement

Cash Flow Statement

Inventory Investments

Financial Ratios Table

Customizing the Starter Workbook

Changing the number of periods

Ratio analysis on existing financial statements

Calculating taxes for a current net loss before taxes

Combining this workbook with other workbooks

Book VI: Chapter 3: Writing a Business Plan

What the Term Business Plan Means

A Few Words about Strategic Plans

Cost strategies

Differentiated products and services strategies

Focus strategies

Look, Ma: No Strategy

Two comments about tactics

Five final strategy pointers

Writing a White Paper Business Plan

Writing a New Venture Plan

Is the new venture’s product or service feasible?

Does the market want the product or service?

Can the product or service be profitably sold?

Is the return on the venture adequate for prospective investors?

Can existing management run the business?

Some final thoughts

Book VII: Chapter 1: Administering QuickBooks

Keeping Your Data Confidential

Using Windows security

Using QuickBooks security

QuickBooks in a Multi-User Environment

Setting up additional QuickBooks users

Changing user rights in Enterprise Solutions

Changing user rights in Premier

Using Audit Trails

Turning on Audit Trail Tracking

Producing an Audit Trail Report

Enabling Simultaneous Multi-User Access

Maintaining Good Accounting Controls

Book VII: Chapter 2: Protecting Your Data

Backing Up the QuickBooks Data File

Backing-up basics

What about online backup?

Some backup tactics

Restoring a QuickBooks Data File

Condensing the QuickBooks Company Files

Cleanup basics

Some cleanup and archiving strategies

Book VII: Chapter 3: Troubleshooting

Using the QuickBooks Help File and This Book

Browsing Intuit’s Product-Support Website

Checking Another Vendor’s Product-Support Website

Tapping into Intuit’s Product-Support System

Trying an Internet Newsgroup

When All Else Fails . . .

Book VIII: Appendix A: A Crash Course in Excel

Copying cell contents

Moving cell contents

Moving and copying formulas

Saving a workbook

Opening a workbook

Information available at the BEA website

Downloading a BEA publication

Uncompressing a BEA publication

Using a BEA publication

Information available at the BLS website

Using Bureau of Labor Statistics information

Information available at the Census Bureau website

Using the Census Bureau’s publications

Using the Census Bureau search engine

Using the Census Bureau Subjects index

Information available through EDGAR

Searching the EDGAR database

Information available at the Federal Reserve website

Using the Federal Reserve website’s information

Information available at the GPO Access site

Searching the GPO Access database