Introduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 3 Beyond the Book 4 Where to Go from Here 4 Book 1: An Accounting Primer 7 Chapter 1: Principles of Accounting 9 The Purpose of Accounting 9 The big picture 10 Managers, investors, and entrepreneurs 10 External creditors 11 Government agencies 11 Business form generation 12 Reviewing the Common Financial Statements 12 The income statement 12 Balance sheet 15 Statement of cash flows 19 Other accounting statements 22 Putting it all together 24 The Philosophy of Accounting 24 Revenue principle 24 Expense principle 25 Matching principle 25 Cost principle 25 Objectivity principle 26 Continuity assumption 26 Unit-of-measure assumption 26 Separate-entity assumption 27 A Few Words about Tax Accounting 27 Chapter 2: Double-Entry Bookkeeping 29 The Fiddle-Faddle Method of Accounting 30 How Double-Entry Bookkeeping Works 32 The accounting model 33 Talking mechanics 35 Almost a Real-Life Example 38 Recording rent expense 39 Recording wages expense 39 Recording supplies expense 40 Recording sales revenue 40 Recording cost of goods sold 40 Recording the payoff of accounts payable 41 Recording the payoff of a loan 42 Calculating account balance 42 Using T-account analysis results 44 A Few Words about How QuickBooks Works 46 Chapter 3: Special Accounting Problems 49 Working with Accounts Receivable 50 Recording a sale 50 Recording a payment 50 Estimating bad-debt expense 51 Removing uncollectible accounts receivable 52 Recording Accounts Payable Transactions 53 Recording a bill 53 Paying a bill 54 Taking some other accounts payable pointers 54 Inventory Accounting 55 Dealing with obsolete inventory 56 Disposing of obsolete inventory 57 Dealing with inventory shrinkage 58 Accounting for Fixed Assets 59 Purchasing a fixed asset 59 Dealing with depreciation 60 Disposing of a fixed asset 62 Recognizing Liabilities 63 Borrowing money 63 Making a loan payment 64 Accruing liabilities 65 Closing Out Revenue and Expense Accounts 67 The traditional close 68 The QuickBooks close 69 One More Thing 70 Book 2: Getting Ready to Use QuickBooks 71 Chapter 1: Setting Up QuickBooks 73 Planning Your New QuickBooks System 73 What accounting does 74 What accounting systems do 74 What QuickBooks does 74 And now for the bad news 75 Installing QuickBooks 76 Dealing with the Presetup Jitters 77 Preparing for setup 78 Seeing what happens during setup 79 Running the QuickBooks Setup Wizard 79 Getting the big welcome 79 Supplying company information 81 Customizing QuickBooks 82 Setting your start date 83 Reviewing the suggested chart of accounts 84 Adding your information to the company file 85 Identifying the Starting Trial Balance 87 A simple example to start 87 A real-life example to finish 89 Chapter 2: Loading the Master File Lists 93 Setting Up the Chart of Accounts List 94 Setting Up the Item List 99 Working with the Price Level List 99 Using Sales Tax Codes 100 Setting Up a Payroll Item List 100 Setting Up Classes 101 Setting Up a Customer List 103 Setting Up the Vendor List 107 Setting Up a Fixed Assets List 111 Setting Up a Price Level List 112 Setting Up a Billing Rate Level List 112 Setting Up Your Employees 113 Setting Up an Other Names List 113 Setting Up the Profile Lists 114 Chapter 3: Fine-Tuning QuickBooks 117 Accessing the Preferences Settings 118 Setting the Accounting Preferences 120 Using account numbers 120 Setting general accounting options 121 Setting the Bills Preferences 123 Setting the Calendar Preferences 123 Setting the Checking Preferences 123 Changing the Desktop View 125 Setting Finance Charge Calculation Rules 127 Setting General Preferences 128 Controlling Integrated Applications 130 Controlling Inventory 131 Controlling How Jobs and Estimates Work 132 Dealing with Multiple Currencies 133 Starting Integrated Payment Processing 134 Controlling How Payroll Works 134 Telling QuickBooks How Reminders Should Work 136 Specifying Reports & Graphs Preferences 137 Setting Sales & Customers Preferences 140 Specifying How Sales Are Taxed 142 Setting the Search Preferences 143 Setting the Send Forms Preferences 143 Fine-Tuning the Service Connection 144 Controlling Spell Checking 145 Controlling How 1099 Tax Reporting Works 146 Setting Time & Expenses Preferences 147 Book 3: Bookkeeping Chores 149 Chapter 1: Invoicing Customers 151 Choosing an Invoice Form 151 Customizing an Invoice Form 152 Choosing a template to customize 152 Reviewing the Additional Customization options 152 Moving on to Basic Customization 157 Working with the Layout Designer tool 159 Working with the web-based Forms Customization tool 162 Invoicing a Customer 162 Billing for Time 168 Using a weekly time sheet 168 Timing single activities 169 Including billable time on an invoice 170 Printing Invoices 172 Emailing Invoices 173 Recording Sales Receipts 174 Recording Credit Memos 176 Receiving Customer Payments 178 Assessing Finance Charges 180 Setting up finance-charge rules 180 Calculating finance charges 181 Using Odds and Ends on the Customers Menu 182 Chapter 2: Paying Vendors 185 Creating a Purchase Order 185 Creating a real purchase order 186 Using some purchase order tips and tricks 189 Recording the Receipt of Items 189 Simultaneously Recording the Receipt and the Bill 192 Entering a Bill 193 If you haven''t previously recorded an item receipt 194 If you have previously recorded an item receipt 195 Paying Bills 197 Reviewing the Other Vendor Menu Commands 201 Vendor Center 201 Sales Tax menu commands 202 Inventory Activities menu commands 203 Print/E-file 1099s 203 Item List 204 Chapter 3: Tracking Inventory and Items 205 Looking at Your Item List 206 Using the Item Code column 206 Using the Item List window 207 Using inventory reports 208 Adding Items to the Item List 208 Adding an item: Basic steps 209 Adding a service item 210 Adding an inventory part 211 Adding a noninventory part 213 Adding an other-charge item 215 Adding a subtotal item 216 Adding a group item 216 Adding a discount item 217 Adding a payment item 218 Adding a sales tax item 219 Setting up a sales tax group 219 Adding custom fields to items 220 Editing Items 222 Adjusting physical counts and inventory values 222 Adjusting prices and price levels 225 Using the Change Item Prices command 225 Using price levels 226 Enabling advanced pricing 228 Managing Inventory in a Manufacturing Firm 229 Handling manufactured inventory the simple way 229 Performing inventory accounting in QuickBooks 230 Managing multiple inventory locations 233 Chapter 4: Managing Cash and Bank Accounts 235 Writing Checks 236 Recording and printing a check 236 Customizing the check form 241 Making Bank Deposits 243 Transferring Money between Bank Accounts 246 Working with the Register 247 Recording register transactions 248 Using Register window commands and buttons 251 Using Edit Menu Commands 254 Reconciling the Bank Account 258 Reviewing the Other Banking Commands 262 Order Checks & Envelopes command 263 Enter Credit Card Charges command 263 Bank Feeds command 264 Loan Manager command 265 Other Names list 265 Chapter 5: Paying Employees 267 Setting Up Basic Payroll 268 Signing up for a payroll service 269 Setting up employees 269 Setting up year-to-date amounts 273 Checking your payroll setup data 274 Scheduling Payroll Runs 274 Paying Employees 274 Editing and Voiding Paychecks 276 Paying Payroll Liabilities 277 Book 4: Accounting Chores 279 Chapter 1: For Accountants Only 281 Working with QuickBooks Journal Entries 281 Recording a journal entry 282 Reversing a journal entry 283 Editing journal entries 284 Updating Company Information 284 Working with Memorized Transactions 284 Reviewing the Accountant & Taxes Reports 285 Creating an Accountant''s Copy of the QuickBooks Data File 287 Using an accountant''s copy 292 Reusing an accountant''s copy 292 Exporting client changes 292 Importing accountant''s changes 293 Canceling accountant''s changes 294 Troubleshooting accountant''s copy transfers 294 Using the Client Data Review.