Glencoe Accounting

QuickBooks Tips

General Ledger Accounts

How do you edit a general ledger account title or account type?

Use the Chart of Accounts from the Lists menu. Select the account that needs to be modified, click the Account drop-down list, and choose Edit. When the Edit Account window opens, click the Type drop-down list and select the correct account type. Move to the Name field to change the account title. To delete an account, select it and then click Delete Account from the Edit menu. If QuickBooks doesn’t allow you to delete the account because it has transactions posted, you can make the account inactive by clicking the Account drop-down list and selecting Make Inactive.

Navigation

Why doesn’t the Open Window List appear at the left of the QuickBooks window?

You can easily hide or show the Open Window List. Choose Open Window List from the View menu. When this option is selected, the Open Window List will appear on your screen.

General Journal Entries

How do you correct a general journal entry?

You can edit/delete a general journal entry at any time, if you have not closed the current period. To make a change, choose Make General Journal Entries from the Company menu. Click the Previous or Next button to select the entry you want to update. Make the changes and save the corrected transaction. To delete an entry, click Delete General Journal from the Edit menu when the transaction is displayed in the Make General Journal Entries window.

Can you change the default data entry format for amount fields?

Yes. You can choose Preferences from the Edit menu, and select the General preference. In My Preferences tab, select the Automatically place decimal point check box and click OK.

Does QuickBooks produce an audit trail if you edit a general journal entry?

Yes. You can activate Audit Trail from Edit > Preferences. Select the Accounting preference and click the Company Preferences tab. Select the Use Audit Trail check box and click OK. QuickBooks will provide you with an Audit Trail report that will provide you with information such as date and time, amount, who modified it, the account, and amount.

Reports

Can you customize a report to allow for additional space for selected columns?

Yes. After you choose to display a report, click the diamond shaped column markers left or right to size the column in order to display the appropriate information.

Can you access the Make General Journal Entries window directly from a report?

Sometimes. When you double click on a general journal entry, QuickBooks will either take you directly to the Make General Journal Entries window where you can edit the transaction or it will take you to the register of the account used in the transaction.

Does QuickBooks include an option to print a six-column work sheet?

No. QuickBooks does not provide an option to print a work sheet. The program allows you to print an Income Statement (Profit & Loss) and a Balance Sheet. To print an Income Statement or a Balance Sheet, choose Company & Financial from the Reports menu.

How do you print a post-closing trial balance?

QuickBooks does not include a standard report called Post-Closing Trial Balance, but the standard Trial Balance provides the same information. The only difference is the title of the report which you can change using the Modify Report button.

The reports (e.g., Journal, General Ledger, Balance Sheet, etc.) do not reflect all of the transactions recorded. QuickBooks allows you to enter transactions that occur over multiple accounting periods. Although this does not cause any difficulties when you enter transactions, you should make sure when printing the reports that they reflect the correct accounting period. You must set the date range to include all of the periods in which you entered transactions.

Closing the Fiscal Year

What if you notice a mistake after you close the fiscal year?

If you notice a mistake after you close the fiscal year, you can still make corrections. Locate the transaction in the correct entry window. Make the necessary changes and save the transaction. QuickBooks will prompt you to enter the closing date password and then click OK.

Can you undo the closing process?

Yes. To reopen you’re the fiscal year, you must clear the current closing date from the Accounting preferences window. This gives anyone with the proper permissions full access to transactions entered on or before the closing date.

Are the steps to close a sole proprietorship any different than those to close a merchandising corporation?

The steps to close a merchandising corporation are the same as those to close a sole proprietorship with one exception. You will have to manually close the withdrawal account in a sole proprietorship. In both cases, QuickBooks will close all of the temporary account to a permanent account called Retained Earnings.

Do you have to backup the QuickBooks files before you close the fiscal year?

No. However, it is a wise practice to backup your files before closing the fiscal year.

Can you edit a general journal entry from an earlier period after you close the fiscal year?

Yes. QuickBooks allows you to edit transactions after you close the fiscal year.

Reconciling the Bank Statement

When you use the Reconcile option and record a bank service charge, do you have to make a separate entry to update the general ledger?

No. QuickBooks automatically creates a general journal entry behind the scenes when you enter a bank service charge using the Reconcile option.

Payroll

Why doesn’t QuickBooks automatically calculate the payroll taxes?

QuickBooks will automatically calculate all of the payroll taxes if the company has a paid payroll subscription. This yearly subscription will enable QuickBooks to use the most current tax tables available. If you do not have a paid subscription, then the automatic payroll tax calculation feature will not available.

What steps are required to correct a payroll entry with the wrong employee ID, earnings information, or payroll deductions?

If the paycheck has not been printed, simply edit the paycheck directly in the register. From the Employees menu, select Edit/Void Paychecks. Choose the paycheck to edit and click the Edit button. The check can then be edited using the Paycheck Detail button.

Why are there no General Ledger accounts appearing in the Preview Paychecks window?

When each payroll item is created, it is associated with a general ledger account. When a paycheck is created using the payroll items, QuickBooks updates the corresponding general ledger accounts automatically.

Payroll Forms

Can you print a Form 8109 using the QuickBooks software?

No, QuickBooks does not include a Form 8109 report. You must manually prepare this form when you submit a payroll tax deposit.

Sales Transactions

What steps are required to correct a sales invoice with the wrong Customer: Job or sale amount?

If you enter the wrong information for an invoice, you can correct it even if you have already saved the transaction. Choose Create Invoices from the Customers menu. Click the Previous or Next button to locate the transaction that needs to be changed. When the invoice appears in the Create Invoices entry window, make the necessary corrections and then save the updated transaction. If you already applied a receipt of payment to the invoice, you must delete the payment before you can delete the invoice.

Cash Receipts Transactions

What steps are required to correct a receipt of payment from a customer?

If you enter the wrong information for payment received from a customer on account, you can correct it even if you have already saved the transaction. Choose Receive Payments from the Customers menu. Click the Previous or Next button to locate the transaction that needs to be changed. When the Customer Payment appears in the Receive Payments entry window, make the necessary corrections and then save the updated transaction.

What steps are required to correct a cash sale from a customer?

If you enter the wrong information for a cash sale received from a customer, you can correct it even if you have already saved the transaction. Choose Enter Sales Receipts from the Customers menu. Click the Previous or Next button to locate the transaction that needs to be changed. When the sales receipt appears in the Enter Sales Receipts entry window, make the necessary corrections and then save the updated transaction.

Why do you have to apply a debit memo to a specific invoice?

Suppose a company purchases merchandise on account for $200 and then receives a $50 credit. You record the credit using the Create Credit Memos/Refunds option from the Customers menu. Upon saving the credit memo, QuickBooks gives you the option of retaining the credit, giving a refund, or applying it to an invoice. By applying it to the appropriate invoice the customer’s balance will remain up-to-date and show a balance of $150.

Purchases Transactions

What steps are required to correct a purchases invoice with the wrong vendor or amount?

If you enter the wrong information for purchase invoice from a vendor on account, you can correct it even if you have already saved the transaction. Choose Enter Bills from the Vendors menu. Click the Previous or Next button to locate the transaction that needs to be changed. When the vendor purchase appears in the Enter bills entry window, make the necessary corrections and then save the updated transaction. If you already applied a payment to an invoice, you must delete the payment before you can delete the purchase invoice.

Can you use the QuickBooks Make General Journal Entries option to record purchases on account and cash payment to vendors?

QuickBooks allows you to enter purchases and payments on account using the Make General Journal Entries window as long as you enter a vendor name in the Name field. However, it is more efficient to use the Enter Bills or Pay Bills options for such transactions, especially if you must apply any credits or take any discounts.

Which G/L account should you use to record a debit memo for damaged supplies?

When you record a debit memo for damaged supplies, use the Supplies account, not the Purchases Returns and Allowances account. Only use the Purchases Returns and Allowances account when you record a debit memo for damaged merchandise.

Cash Payments Transactions

What steps are required to correct a cash payment entry?

You can change any information on a cash payment even if you have closed the current period. To make a change, choose Write Checks from the Banking menu. Click Previous or Next to locate the transaction you want to update. Make the changes and save the correct transaction. QuickBooks automatically applies the corrections.

Can you use the Make General Journal Entries option for cash fund transactions?

You have learned how to use the Write Checks, Pay Bill,Enter Sales Receipts, and Receive Payments options to record cash payments and cash receipts, respectively. However, you can always use the Make General Journal Entries option to record transactions involving cash. The only disadvantage to using the Make General Journal Entries option is that QuickBooks will not print checks for any cash payments transactions you record. However, this is not an issue of you manually write checks and use QuickBooks only to record the transactions.

You can record various cash funds transactions using the Make General Journal Entries option, but you can always work with the Write Checks, Pay Bill,Enter Sales Receipts, and Receive Payments options if you are more comfortable using these options.

Inventory

Why doesn’t the chart of accounts include an Income Summary account to make an adjustment to Merchandise Inventory?

You should use the Inventory Adjustment account, not the Income Summary account to make an adjustment to Merchandise Inventory. QuickBooks requires that you use the Inventory Adjustment account so that the program can correctly compute the Cost of Goods Sold section on a Profit & Loss report.

Can you change the inventory valuation method for an inventory item?

No, QuickBooks only uses the average cost method of inventory valuation. This explains why you cannot change the method of valuing an inventory item.

How do you correct an Enter Bills (Purchases) transaction if you enter the wrong quantity or item number?

You can change any information on a purchase transaction even if you have closed the current period. To make a change, choose Enter Bills from the Vendors menu. Click Previous or Next to locate the transaction you want to update. Make the changes and save the correct transaction. QuickBooks automatically applies the corrections.

Dates

How do you enter dates in QuickBooks?

QuickBooks allows you to enter a date using several different methods. First, you can use the calendar button located to the right of the Date field. Second, you can enter the date using the correct date format (ie. 12/01/2010). Finally, you can enter the date in number format and allow QuickBooks to format the date for you (ie, December 1, 2010 would be entered as 120110).

Petty Cash

Does QuickBooks include any features to prepare a petty cash register?

QuickBooks does not provide any features to prepare a petty cash register such as what you complete manually. However, like the register for the Cash in Bank account, QuickBooks does provide a similar register for Petty Cash. This will enable you to enter your petty cash transactions directly into a register for this account.

Promissory Notes

How do you record a transaction where a company accepts a promissory note for an accounts receivable balance?

To transfer the balance of an accounts receivable account to a promissory note, use the Make General Journal Entries option. This will create available credit that needs to be applied to the customer’s account balance. You will need to apply the credit to the customer’s account using the Receive Payments option.

How do you record a transaction where a company issues a promissory note for an accounts payable balance?

To transfer the balance of an accounts payable account to a promissory note, use the Make General Journal Entries option. This will create available credit that needs to be applied to the vendor’s account balance. You will need to apply the credit to the vendor’s account using the Pay Bills option.

Partnerships

Does QuickBooks support partnerships?

Yes, QuickBooks does support the partnership form of business. When you create a new company QuickBooks provides several choices of business: Corporation, S Corporation, Partnerships, and Sole Proprietorships are among the list. QuickBooks allows you to set up as many equity accounts as are necessary for the partnership. QuickBooks does not create the equity accounts for you.

Can you use the Closing Date feature to automatically close a partnership?

No. QuickBooks does not provide any options to identify how to share profits and losses amount partners. In a partnership, QuickBooks will only create one Retained Earnings account. All profits of losses would be closed into this one account and would have to be manually distributed using the Make General Journal Entries option.

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