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 10 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 13 Balance sheet 16 Statement of cash flows 19 Other accounting statements 22 Putting it all together 23 The Philosophy of Accounting 25 Revenue principle 25 Expense principle 26 Matching principle 26 Cost principle 26 Objectivity principle 27 Continuity assumption 27 Unit-of-measure assumption 27 Separate-entity assumption 28 A Few Words about Tax Accounting 28 Chapter 2: Double-Entry Bookkeeping 29 The Fiddle-Faddle Method of Accounting 30 How Double-Entry Bookkeeping Works 33 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 41 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 54 Paying a bill 54 Taking some other accounts payable pointers 55 Inventory Accounting 56 Dealing with obsolete inventory 56 Disposing of obsolete inventory 57 Dealing with inventory shrinkage 58 Accounting for Fixed Assets 60 Purchasing a fixed asset 60 Dealing with depreciation 60 Disposing of a fixed asset 61 Recognizing Liabilities 63 Borrowing money 64 Making a loan payment 64 Accruing liabilities 65 Closing Out Revenue and Expense Accounts 68 The traditional close 68 The QuickBooks close 70 One More Thing 71 Book 2: Getting Ready To Use QuickBooks 73 Chapter 1: Setting Up QuickBooks 75 Planning Your New QuickBooks System 75 What accounting does 75 What accounting systems do 76 What QuickBooks does 76 And now for the bad news 77 Installing QuickBooks 78 Dealing with the Presetup Jitters 79 Preparing for setup 79 Seeing what happens during setup 80 Running the QuickBooks Setup Wizard 81 Getting the big welcome 81 Supplying company information 82 Customizing QuickBooks 83 Setting your start date 84 Reviewing the suggested chart of accounts 86 Adding your information to the company file 87 Identifying the Starting Trial Balance 89 A simple example to start 89 A real-life example to finish 91 Chapter 2: Loading the Master File Lists 93 Setting Up the Chart of Accounts List 94 Setting Up the Item List 98 Working with the Price Level List 99 Using Sales Tax Codes 99 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 110 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 113 Chapter 3: Fine-Tuning QuickBooks 115 Accessing the Preferences Settings 116 Setting the Accounting Preferences 117 Using account numbers 118 Setting general accounting options 119 Setting the Bills Preferences 121 Setting the Calendar Preferences 121 Setting the Checking Preferences 121 Changing the Desktop View 123 Setting Finance Charge Calculation Rules 125 Setting General Preferences 126 Controlling Integrated Applications 128 Controlling Inventory 129 Controlling How Jobs and Estimates Work 130 Dealing with Multiple Currencies 131 Starting Integrated Payment Processing 132 Controlling How Payroll Works 132 Telling QuickBooks How Reminders Should Work 134 Specifying Reports & Graphs Preferences 135 Setting Sales & Customers Preferences 138 Specifying How Sales Are Taxed 140 Setting the Search Preferences 141 Setting the Send Forms Preferences 141 Fine-Tuning the Service Connection 142 Controlling Spell Checking 143 Controlling How 1099 Tax Reporting Works 144 Setting Time & Expenses Preferences 145 Book 3: Bookkeeping Chores 147 Chapter 1: Invoicing Customers 149 Choosing an Invoice Form 149 Customizing an Invoice Form 150 Choosing a template to customize 150 Reviewing the Additional Customization options 150 Moving on to Basic Customization 155 Working with the Layout Designer tool 157 Working with the web-based Forms Customization tool 160 Invoicing a Customer 160 Billing for Time 166 Using a weekly time sheet 166 Timing single activities 167 Including billable time on an invoice 168 Printing Invoices 170 Emailing Invoices 171 Recording Sales Receipts 172 Recording Credit Memos 174 Receiving Customer Payments 176 Assessing Finance Charges 179 Setting up finance-charge rules 179 Calculating finance charges 180 Using Odds and Ends on the Customers Menu 181 Chapter 2: Paying Vendors 183 Creating a Purchase Order 183 Creating a real purchase order 184 Using some purchase order tips and tricks 187 Recording the Receipt of Items 187 Simultaneously Recording the Receipt and the Bill 191 Entering a Bill 192 If you haven''t previously recorded an item receipt 192 If you have previously recorded an item receipt 194 Paying Bills 196 Reviewing the Other Vendor Menu Commands 199 Vendor Center 199 Sales Tax menu commands 200 Inventory Activities menu commands 201 Print/E-file 1099s 201 Item List 202 Chapter 3: Tracking Inventory and Items 203 Looking at Your Item List 204 Using the Item Code column 204 Using the Item List window 205 Using inventory reports 206 Adding Items to the Item List 206 Adding an item: Basic steps 207 Adding a service item 208 Adding an inventory part 209 Adding a noninventory part 211 Adding an other-charge item 212 Adding a subtotal item 213 Adding a group item 214 Adding a discount item 215 Adding a payment item 216 Adding a sales tax item 217 Setting up a sales tax group 217 Adding custom fields to items 218 Editing Items 220 Adjusting physical counts and inventory values 220 Adjusting prices and price levels 223 Using the Change Item Prices command 223 Using price levels 224 Enabling advanced pricing 226 Managing Inventory in a Manufacturing Firm 227 Handling manufactured inventory the simple way 227 Performing inventory accounting in QuickBooks 228 Managing multiple inventory locations 231 Chapter 4: Managing Cash and Bank Accounts 233 Writing Checks 234 Recording and printing a check 234 Customizing the check form 239 Making Bank Deposits 241 Transferring Money between Bank Accounts 244 Working with the Register 245 Recording register transactions 246 Using Register window commands and buttons 249 Using Edit Menu Commands 252 Reconciling the Bank Account 256 Reviewing the Other Banking Commands 260 Order Checks & Envelopes command 260 Enter Credit Card Charges command 260 Bank Feeds command 261 Loan Manager command 262 Other Names list 262 Chapter 5: Paying Employees 263 Setting Up Basic Payroll 264 Signing up for a payroll service 265 Setting up employees 265 Setting up year-to-date amounts 269 Checking your payroll setup data 270 Scheduling Payroll Runs 270 Paying Employees 270 Editing and Voiding Paychecks 272 Paying Payroll Liabilities 273 Book 4: Accounting Chores 275 Chapter 1: For Accountants Only 277 Working with QuickBooks Journal Entries 277 Recording a journal entry 278 Reversing a journal entry 279 Editing journal entries 280 Updating Company Information 280 Working with Memorized Transactions 280 Reviewing the Accountant & Taxes Reports 281 Creating an Accountant''s Copy of the QuickBooks Data File 283 Using an accountant''s copy 288 Reusing an accountant''s copy 288 Exporting client changes 288 Importing accountant''s changes 289 Canceling accountant''s changes 290 Troubleshooting accountant''s copy transfers 291 Using the Client Dat.