Cover

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Table of Contents

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Book I: Getting Started with an Accounting Primer

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

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

Recording rent expense

Recording wages expense

Recording 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

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

Taking 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: Getting Ready to Use QuickBooks

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 setup

Seeing what happens during setup

Running the QuickBooks Setup Wizard

Getting the big welcome

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

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

Chapter 3: Fine-Tuning QuickBooks

Accessing the Preferences Settings

Setting the Accounting Preferences

Using account numbers

Setting 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: Bookkeeping Chores

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 Forms Customization 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 Sales Receipts

Recording Credit Memos

Receiving Customer Payments

Assessing Finance Charges

Setting up finance charge rules

Calculating finance charges

Using Odds and Ends on the Customers Menu

Chapter 2: Paying Vendors

Creating a Purchase Order

Creating a real purchase order

Using some 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

Paying Bills

Reviewing the Other Vendor Menu Commands

Vendor Center

Sales Tax menu commands

Inventory Activities menu commands

Print/E-file 1099s

Item List

Chapter 3: Tracking Inventory and Items

Looking at Your Item List

Using the Item Code column

Using the Item List window

Using inventory reports

Adding Items to the Item List

Adding an item: Basic steps

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

Managing Inventory in a Manufacturing Firm

Handling manufactured inventory the simple way

Performing inventory accounting in QuickBooks

Managing multiple inventory locations

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

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: Accounting Chores

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 Copyof 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

Using the Client Data Review Commands

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

Chapter 3: Preparing a Budget

Reviewing Common Budgeting Tactics

Top-line budgeting

Zero-based budgeting

Benchmarking

Putting it all together

Taking a Practical Approach 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

Chapter 4: Using Activity-Based Costing

Reviewing Traditional Overhead Allocation

Understanding How ABC Works

The ABC product line income statement

ABC in a small firm

Implementing a Simple ABC System

Seeing 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

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: Financial Management

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

Chapter 2: Economic Value Added Analysis

Introducing the Logic of EVA

Seeing EVA in Action

An example of EVA

Another example of EVA

Reviewing 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

Presenting Two Final Pointers

And Now, a Word to My Critics

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

The bottom line

Calculating the Rate of Return on Capital

Calculating the investment amount

Estimating the net cash flows

Calculating the return

Measuring Liquidity

Thinking about Risk

What Does All This Have to Do with QuickBooks?

Book VI: Business Plans

Chapter 1: Profit-Volume-Cost Analysis

Seeing 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

Recognizing the Downside of theProfit-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

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

Performing ratio analysis on existing financial statements

Calculating taxes for a current net loss before taxes

Combining this workbook with other workbooks

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

A White Paper Business Plan

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: Care and Maintenance

Chapter 1: Administering QuickBooks

Keeping Your Data Confidential

Using Windows security

Using QuickBooks security

Using 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

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

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: Additional Business Resources

Appendix A: A Crash Course in Excel

Copying cell contents

Moving cell contents

Moving and copying formulas

Saving a workbook

Opening a workbook

Appendix B: Government Web Resources for Businesses

Finding information at the BEA website

Downloading a BEA publication

Uncompressing a BEA publication

Using a BEA publication

Finding information at the BLS website

Using BLS information

Finding information at the Census Bureau website

Using the Census Bureau’s publications

Using the Census Bureau search engine

Using the Census Bureau Subjects index

Finding information through EDGAR

Searching the EDGAR database

Finding information at the Federal Reserve website

Using the Federal Reserve website’s information

Information available at the GPO Access website

Searching the GPO Access database

Appendix C: Glossary of Accounting and Financial Terms

About the Author

Cheat Sheet

Connect with Dummies

Introduction

Few people read introductions to reference books, so I’ll make this very brief. I just want to tell you which versions of QuickBooks this book works for, what’s in the reference, what it assumes about your existing skills, and what conventions I use.

About This Book

QuickBooks comes in several flavors, including QuickBooks Simple Start, QuickBooks Pro, QuickBooks Premier, and QuickBooks Enterprise Solutions. This reference talks about QuickBooks 2014 Premier, which is nearly identical to QuickBooks Enterprise Solutions and is a superset of QuickBooks Pro. If you’re using QuickBooks Simple Start — which is the simplest, most bare-bones version of QuickBooks — you shouldn’t use this book. Sorry. Fortunately, I have a solution of sorts for you. You may want to get another book I’ve written: QuickBooks Simple Start For Dummies. That book covers the Simple Start version of QuickBooks in friendly detail.

On the other hand, even though this book is written for QuickBooks Enterprise Solutions and QuickBooks Premier, if you’re using QuickBooks Pro, don’t worry. You’re just fine with this book. And don’t freak out if you’re using some version of QuickBooks that’s very similar to QuickBooks 2014, such as QuickBooks 2013 or QuickBooks 2015. Although this reference is about QuickBooks 2014, it also works just fine for the 2012, 2013, and probably 2015 versions of QuickBooks because QuickBooks is a very mature product at this point. The changes from one year to the next are modest. This means that if you’re using QuickBooks 2012, stuff may look a little different if you closely compare the images in this book with what you see on your screen, but the information in this reference will still apply to your situation.

Note, too, that specialty versions of QuickBooks, such as QuickBooks Accountants Edition and QuickBooks Contractors, also work almost identically to QuickBooks Premier.

If you use QuickBooks Pro and see some whistle or bell that you really want to use but that isn’t available in your version of QuickBooks, you’ll know that you should upgrade to the Premier version of QuickBooks.

The bottom line? Yes, QuickBooks comes in several flavors. Yes, Intuit publishes new editions of its QuickBooks products every year. But you can use this book for any recent version of QuickBooks Pro, Premier, or Enterprise Solutions.

To make the best use of your time and energy, you should know about the conventions I use in this book:

When I want you to type something such as Jennifer, it’s in bold letters.

By the way, except for passwords, you don’t have to worry about the case of the stuff you type in QuickBooks. If I tell you to type Jennifer, you can type JENNIFER. Or you can follow poet e e cummings’s lead and type jennifer.

Whenever I tell you to choose a command from a menu, I say something like Choose Lists⇒Items, which simply means to first choose the Lists menu and then choose Items. The ⇒ separates one part of the command from the next part.

You can choose menus and commands and select dialog-box elements with the mouse. Just click the thing that you want to select.

While I’m on the subject of conventions, let me also mention something about QuickBooks conventions, because it turns out that there’s really no good place to point this out. QuickBooks doesn’t use document windows the same way that other Windows programs do. Instead, it locks the active window into place and then displays a list of windows in its Navigator pane, which is like another little window. To move to a listed window, you click it.

You can tell QuickBooks to use windows like every other program does, however, by choosing View⇒Multiple Windows. You can even remove the Navigator pane by choosing View⇒Open Window List.

Foolish Assumptions

I’m making only three assumptions about your QuickBooks and accounting skills:

You have a PC with Windows XP Service Pack 2 or later, Windows Vista, Windows 7, or Windows 8. (I took pictures of the QuickBooks windows and dialog boxes in Windows 8, in case you’re interested.)

You know a little bit about how to work with your computer.

You have, or will buy, a copy of QuickBooks Pro, QuickBooks Premier, or QuickBooks Enterprise Solutions for each computer on which you want to run the program.

In other words, I don’t assume that you’re a computer genius or an MBA, or that you’re super-experienced in the arcane rules of accounting. I assume that QuickBooks and accounting are new subjects to you. But I also assume that you want to understand the subjects because you need to do so for your job or your business.

Icons Used in This Book

Like many computer books, this book uses icons, or little pictures, to flag things that don’t quite fit into the flow of things.

The Tip icon marks tips (duh!) and shortcuts that you can use to make QuickBooks easier.

Remember icons mark the information that’s especially important to know. To siphon off the most important information in each chapter, just skim these icons.

The Technical Stuff icon marks information of a highly technical nature that you normally can skip.

The Warning icon tells you to watch out! It marks important information that may save you headaches when using QuickBooks 2014.

Beyond the Book

QuickBooks 2014 All-in-One For Dummies includes some extra content that you bought with your book but didn’t actually get inside the book. Okay, I know that sounds bad at first blush. But don’t worry. This extra, premium stuff is available online:

Online articles covering additional topics at

www.dummies.com/extras/quickbooks2014aio

Here, you’ll find easy-to-digest articles that cover a variety of topics related to more smoothly implementing QuickBooks in your small business.

The Cheat Sheet for this book is at

www.dummies.com/cheatsheet/quickbooks2014aio

Updates to this book, if we have any, are at

www.dummies.com/extras/quickbooks2014aio

Where to Go from Here

This reference combines eight short books, including a minibook about accounting, one about setting up the QuickBooks system, one for bookkeepers using QuickBooks, one for accountants and managers using QuickBooks, a minibook about small-business financial management, a minibook about business planning, a minibook about taking care of a QuickBooks accounting system, and a minibook of appendixes of further useful information.

I’m not going to go into more detail here about what’s available in the book. If you have a specific question about what’s covered or where some topic is covered, refer to the Table of Contents in the front of this reference. Also remember that the book provides an Index to help you find just the page or pages that have the information you need.

While I’m on the subject of what’s in this book and how to find information, let me make four tangential points:

You’ll never read this book from cover to cover unless you’re someone who has an obsessive-compulsive personality (like me) and many hours to devote to reading. But that’s okay. This reference isn’t meant to be read from cover to cover like some Stieg Larsson page-turner. Instead, chapters within the eight minibooks are organized into largely self-contained descriptions of how you do the things that you need to do. You just read the paragraph, page, or chapter that provides the information you want.

I haven’t discussed in any detail how to use the QuickBooks Premier and QuickBooks Enterprise Solutions features for business planning. The wizard-based approach that QuickBooks Premier and QuickBooks Enterprise Solutions provide for business planning is not, in my humble opinion, the right way to do this. Instead, I discuss in detail alternative, superior approaches to business planning and budgeting (using spreadsheets) in Book VI. (Just so you know: The approach I describe and recommend here is the same one that any business school teaches its students.)

At a few points in the book, you’ll find me saying things like “Well, I really don’t think you should use this part of the product.” I just want to explain here, up front, where I’m coming from on this. First, know that I think QuickBooks is an outstanding product. But not every feature and every command is good. I’ve already mentioned that the new business planning tools aren’t ones that I can recommend. And payroll, very frankly, is another pain-in-the-butt feature that most businesses should avoid. (I do briefly discuss payroll in Book III, Chapter 5.) So if I think that a particular feature is one that you shouldn’t use, I don’t take up page space (or much page space) describing the feature. I’d rather use that page space to describe other stuff that I believe is going to be valuable to you and other readers.

I should also mention one final thing: Accounting software programs require you to do a certain amount of preparation before you can use them to get real work done. If you haven’t started to use QuickBooks yet, I recommend that you skim Book I and then read Book II to find out what you need to do first.

QuickBooks® 2014 All-in-One For Dummies®

QuickBooks^® 2014 All-in-One For Dummies^®