Read about QuickBooks fundamentals for nonprofit organizations. Review best practices for new users including: Orientation and basic navigation Recording expenses Recording income Hodge-podge: credit cards, journal entries and bank reconciliations Basic reporting Common QuickBooks errors

1. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
Agenda
1. Reference material
2. Orientation and basic navigation
3. Recording expenses
4. Recording income
5. Hodge‐podge: credit cards, journal entries and bank reconciliations
6. Basic reporting
7. Eighteen common QuickBooks errors
Ian Shuman, CPA
Partner, Client Services
Gelman, Rosenberg & Freedman, CPAs
301‐951‐9090
ishuman@grfcpa.com
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2. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
1. REFERENCE
A. File Types
i) QBW ‐ Normal “Working” file
ii) QBB ‐ Full backup file
iii) QBM ‐ A “Portable File” meant for emailing (missing some preferences, log and database indexing)
iv) QBX ‐ Accountant’s copy you create and send to an external accountant (to work concurrently)
v) QBA ‐ The accountant’s copy that the external accountant is working in
vi) QBY ‐ File that the external account sends back to you to import their changes (small file)
vii) QBMB ‐ Backup for Macintosh
B. Annual Versions (be aware of Intuit’s three‐year “Sunset” policy)
i) 2006: Always‐on audit trail, Centers
ii) 2007: Minor improvements
iii) 2008: Big improvements to accountant’s copy
iv) 2009: Some multi‐currency, prompt to close, sorting in bank reconciliations
v) 2010: Bolds uncleared items on bank reconciliations screen, added “Save” to most forms
vi) 2011: Added a history pane on forms, limited B/S by class, batch invoicing
vii) 2012: Inventory center, document attachment, calendar view, simpler creation of credit memos (A/R)
viii) 2013: Collapse report line items, visual layout changes throughout (bigger font, wider rows, icon bar left or
top, changes to layout of centers), improved transaction toolbar, maximize transactions
C. Different Versions
i) Pro ‐ Most common
ii) Premier ‐ Saves reconciliations as PDF, allows reversing entries, subtotals j/e debits/credits, about 2x price
iii) Nonprofit version is same as Premier with very little added
iv) Enterprise ‐ Much stronger database
v) Online ‐ Great if you need it but different interface (one window at a time); limitations on importing
vi) Sideways compatible (except online edition) but not between years
D. System Requirements for 2013 software
i) 2‐2.4 GHz processor, 1GB RAM, 2.5 GB disk space, Windows XP/Vista/7
ii) Supposedly Windows 8 works only with QB 2013 or later
Notes
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3. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
2. ORIENTATION and BASIC NAVIGATION
A. Visual Tour
i) Home screen
ii) Menu bar
iii) Icon bars (general and transaction specific)‐ note the pop‐up tips!
iv) Centers
v) Getting around
B. Preferences and Display Options
i) Tip: walk through the preferences
ii) My favorite options: Enter moves between fields, beep when recording, closing date
iii) Windows (one or multiple), Open window list (on or off), Icon Bar (top or left)
C. The Tao of QuickBooks (it thinks like a database)
i) No hard close because it can calculate that on the fly (i.e. closing P&L)
ii) How can account numbers be optional?
iii) It’s table driven instead of chart of accounts driven
D. Concept of forms, lists, items and reports‐ no separate modules
i) Forms
ii) Lists
iii) Items
iv) Reports
E. Registers (and a caution about them)
F. Take a Look at the Company Snapshot and Calendar
G. Remember the Help Menu!
Notes
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4. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
3. EXPENSES (MONEY OUT)
A. Two Options for Recording Cash‐Out
i) “Write Check”‐ Expense and payment happen at same date (cash basis)
ii) “Enter Bill” followed by “Pay Bill”‐ Expense and payment happen on different dates (accrual basis)
Tip: Don’t do “Enter Bill” and then “Write Check.”
B. Online Banking
i) Payments can be imported from the bank activity (limited you to cash basis and won’t include o/s
transactions. Can be okay if you pay bills electronically anyway)
ii) Payments can be initiated from within QuickBooks (but internal control issues)
Tip: Keep in mind that you still have to code all the transactions.
C. Voiding Checks
i) Will go back and change the original entry on the original date
ii) Works slightly better if from a period that is “Closed” via the closing date
Suggestion: Always use a journal entry (debit cash, credit something) and then clear both in the next bank
reconciliation.
D. Other Cash Payments
i) EFT transactions and wires can be entered by journal entry, “Write Check” or “Pay Bill”
ii) What about payroll?
E. Credit Memo
i) Go to Enter Bill and select “Credit” in the toggle buttons on top left and then complete the form. Then go to
the “pay bills” screen, select the open bill and then click on “set credits”
Notes
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5. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
4. REVENUE (MONEY IN)
A. Three Options for Recording Cash‐In
Multiple
Cash or customers per Tracks donor
accrual? Steps form? Uses items? history?
Make Deposit cash 1 yes no no
Enter Sales Receipt cash 1 no yes yes
Create Invoice/
Receive Payment accrual 2 or 3 no yes yes
Tip: If you have created an invoice then do not record revenue when the payment is received.
B. Undeposited Funds
i) This account is optional and can be used to group “Receive Payment” transactions into a single deposit
ii) This makes the bank reconciliation much easier
iii) Not necessary if you are using “Make Deposit” or “Enter Sales Receipts” to record revenue
iv) In this case a “make deposit” entry would simply move cash from “Undeposited Funds” to the bank account.
v) In theory, the account should go to zero every time there is a deposit
C. Credit Memos and Refund
i) To create a credit memo just go to Customer/Create Credit memo or just open the invoice and click on
“refund/credit”
ii) When you close the credit memo QuickBooks will prompt you to apply, refund or retain the credit memo.
iii) There are also buttons for these options on the credit memo form (in the transaction icon bar).
iv) This is much cleaner than credit memos on the vendor side.
Notes
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6. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
5. HODGE‐PODGE: CREDIT CARDS, JOURNAL ENTRIES AND BANK RECONCILIATIONS
A. Two Options for Recording Credit Card Charges
i) Often entered in total through accounts payable when the bill arrives
ii) Advantage of entering each charge individually as a credit card charge:
(1) The activity can be tracked by vendor (not just name of credit card)
(2) Better tracking of dates when expense is incurred (if month to month reporting matters)
(3) Much better if not paying entire amount due
(4) Can be reconciled the same way a bank account is
(5) … But it’s more work
B. Journal Entries
i) Generally these are used for any transaction not represented by a form
ii) That often means cash is not involved
C. Bank reconciliations
i) Very easy
ii) Everything that affects cash automatically shows up in bank reconciliation screen
iii) “Hide Transactions After Statement Date” is your best friend
iv) “Beginning Balance” is calculated from the register
v) Then simply click on everything that appears on the bank statement and “Difference” should be zero
vi) If not, the “Reconcile Now” button will give you the option to “Enter Adjustment” which automatically posts
a journal entry to an expense account called “Reconciliation Adjustments” for the difference.
vii) When finished, select “reconcile now” to generate a report and update the register
Recommendation: Don’t ever use the automatic adjustment feature!
Notes
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7. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
6. BASIC REPORTING
A. Overview
i) Can be accessed under “Reports” on menu bar or from the report center
ii) Reports menu is grouped by area
iii) Drilldown: Double click on any number to go from report to ledger detail to actual form
B. Visual Tour
i) Dates, Columns, Total by and Sort by
ii) Refresh anywhere!
iii) Expand vs Collapse, Excel
C. Customize Report‐ (modifying the report is easy but limited)
i) Display ‐ Defining the report
ii) Filters ‐ Literally like placing a filter so you only see a subset
iii) Limitations
(1) Rows are always defined by chart of accounts (almost)
(2) Custom reports are available but somewhat limited
(3) Report is generally a single time period (but can be any time period)
(4) Ability to pick and choose columns is limited
D. Memorizing Reports
i) Make changes and then hit “Memorize” ‐ will prompt you to name the report
ii) You can create your own report groups
iii) Have to memorize again to change what is memorized ‐ will prompt for “Replace” or “New”
Note: The dates in memorized reports will only change if date field is relative.
E. Can use classes or jobs (or both) to segregate P&L activity in columns. These are user defined.
Notes
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8. [FUNDAMENTALS OF QUICKBOOKS]
Presented by Ian Shuman, CPA
Gelman, Rosenberg & Freedman CPAs February 14, 2013
7. EIGHTEEN COMMON QUICKBOOKS ERRORS
A. Everyone uses the same log in (and it’s the admin user’s login)
B. Adding, deleting or changing transactions in prior years (tip: use the “closing date” feature)
C. Having WAY too many windows open and then wondering why the software is so slow
D. Dangling payable transactions
i. Entering a bill followed by write check
ii. Deleting a paid bill but not the bill payment
E. Dangling receivable transactions
i. Entering a receivable and then recording revenue through “Make Deposits”
ii. Using “Receive Payments” when there is no A/R recorded
F. Using the register to clear bank transactions
G. Having the same customer or vendor name multiple times using slightly different spellings
H. Entering payroll at net instead of gross
I. Not entering electronic payments, payroll or wires received at all
J. Changing or voiding cash activity after the transaction has been cleared in a bank reconciliation
K. In a bank reconciliation, clearing a transaction dated after the bank statement date
L. Posting memorized transactions by accident
M. Using the “Reconcile Now/Enter Adjustment” button
N. Posting similar transactions inconsistently
O. Not doing bank reconciliations at all
P. Not using classes for a P&L transaction (if your file uses them)
Q. Putting all credit card payments to an expense account called “Credit Card Payments”
R. Working in the wrong file
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