By Mr.

Ochieng Tom Page 1 1/31/2017

QuickBooks Course Outline

Course Objectives

 To introduce the basic concepts of Computerized Accounting Packages.

 To make the student proficient in QuickBooks accounting so the student can use the
knowledge gained to set up and run a system in the real organizational environment.

1. Background Information  Making Deposits

 About Computerized Accounting  Reconciling Accounts
 QuickBooks Program Features  Posting and Paying VAT.
 Account Types
 Using Help 7. Staff and Directors Transactions
 Payroll Handling
2. Getting Started  Statutory Deductions
 Installation and Registration  Loans and Staff Advances
 Setting up a new Company  Directors Accounts
 Passwords
 Preferences and Customization 8. Periodic Transactions
 Setting Up the VAT Table  Adjustments
 Creating Accounts  Journal Entries
 Opening Balances  Depreciation
 Backing Up Data  Budget Reports
 Generating Reports
3. Stock Control Transactions
 Creating Items
 Recording Movement in Stock
 Selling Stock
 Purchasing Stock

4. Creditors Transactions
 Entering Bills
 Paying Bills
 Entering Credit Notes for
Creditors
 Editing and Deleting
 Creditors Reports

5. Customers Transactions
 Raising Invoices
 Recording Cash Sales
 Receiving Payments against
Invoices
 Printing Statements
 Issuing Credit Notes and
Refunds
 Depositing Payments
 Accounts Receivable Reports

6. Bank and Cash Transactions

 Writing Cheques
 Standing Orders

Notes prepared by Ochieng Tom

 Background Information
In this section you will learn about:
 Computerized Accounting
 QuickBooks Program Features
 Account Types
 Using Help

COMPUTERISED ACCOUNTING
Computers permit the classification and summarization of data in more forms and at lower cost than
manual systems can. Producing reports and statements is only a matter of choosing the correct
option and printing. As long as your data has been entered correctly. Principles of accounting still
apply in a computerized system and a basic knowledge/understanding of accounting is essential.

ACCOUNTING BASICS

The accounting process involves:

1. Recording transactions
2. Summarizing information at the end of the period
3. Preparation of financial statements

In order to record transactions, the first things you are going to need are source documents or
supporting documents. This is basically a Business paper or a voucher and normally is the first
record prepared for a transaction. Such documents show the date, amount, the nature of transaction
and parties involved plus other necessary details.
Entries into the accounts journals or the computer are made from the supporting documents such as;
sales receipt, purchase receipt, sales invoice, credit note, bills, credit refunds, delivery notes,
payment vouchers, petty cash vouchers, casual salary vouchers and cheques, letters, statements
among others.

Transactions are recorder for a whole accounting period; which is one year of business whether
it is the calendar year or a fiscal year.

The Accounting Cycle

This is the complete sequence of accounting procedures that are repeated in the same order during
each accounting period. These include:

1. Recording business transactions and events in the journals.

2. Classifying data by posting from the journals to the ledger.
3. Summarising data into a trial balance
4. Adjusting, correcting and updating entries: In computerized accounting this is only necessary
if data was entered in correctly and cannot be detected.
5. Summarizing corrected work, producing the final trial balance. This is normally done
automatically in almost any form you require in computerized accounting.

Notes prepared by Ochieng Tom

 6. Closing of the nominal accounts records. This may be done in computerized accounting
depending on the program you choose to use. Some programs do not make it necessary for
you to close your accounts in order to go to the next financial year and post transactions.
7. Prepare a post closing balance. (Done in manual accounts mostly only)
8. Reversing adjusting entries to facilitate the recording process in the subsequent account
period.

Main Categories of Accounts

There are five main types of accounts classifications namely,
1. Assets
2. Liabilities
3. Owners Equity
4. Revenue
5. Expenses

Adjusting Entries

Some financial events are not recognized on a day to day. These must be recorded through
adjusting entries or periodic entries at the end of the period to bring the accounting records up to
date. e.g. Depreciation. Adjusting entries are also made:
1. To apportion prepayments of expenses and revenue.
2. To record accrued expenses and revenue.

Adjusting entries are required for transactions that involve a period of more than one accounting
cycle. (1 year). The reasons for this are;
1. To measure assets and liabilities accurately.
2. To measure net income accurately.

Accruals

Certain transactions are only realized with the passage of time. They are normally recorded at the
time of payment, unless the end of the accounting period comes before time for payment. Then the
transaction has to be recorded and the payment made later in the next financial year.
e.g. Salaries, rent, insurance, loan interest expense.

QuickBooks Program Features

Important information before you begin

The information in this document was compiled from the experiences and suggestions of other
QuickBooks users. Because your own needs may vary considerably, you may have to make
changes to meet those needs. If in doubt, you should check with your accountant.

A QuickBooks company contains all the financial records for a single business. If you are just
starting out with QuickBooks, and if you are not a Quicken or QuickBooks for DOS user, the first
thing you must do is create a QuickBooks company for your financial records. The Easy Step
interview will guide you in doing this.

Notes prepared by Ochieng Tom

Getting started with the QuickBooks EasyStep interview

The QuickBooks Easy Step Interview asks you questions about your business, and uses your
answers to help you set up your product sales business in QuickBooks. If you are not an
incorporated business, you can still use a QuickBooks company to meet your accounting needs.
We recommend the interview as the easiest way to get started and to customize QuickBooks for
your type of business.
If you choose not to use the Easy Step Interview, you should follow the setup directions in the
"Setting up a QuickBooks company" chapter in the Getting Started Guide.

Understanding QuickBooks terminology

QuickBooks uses a few special terms that you should be aware of:

 Bill
A bill is what you receive from your vendor or subcontractor. QuickBooks tracks the bills you
enter in an accounts payable account until you pay them.

 Chart of accounts
A list of accounts that you use to track how much money your company has, how much money it
owes, how much money is coming in, and how much is going out. When you set up your
QuickBooks company, you can choose a preset chart of accounts designed especially for product
sellers.

 Classes
A way to categorise income and expenses. For example, you can categorise income and
expense by a class that you define, such as departments in a store (women's, men's, children's).

 Items
The items on your QuickBooks Item list represent the products you sell. Items also include
anything you might want to put on an invoice, such as services, carriage charges, payments, and
discounts.

 Sales forms
QuickBooks has three types of sales forms: a sales receipt (if you get paid immediately), an
invoice (if you get paid later), and a credit memo (for recording a return).

Notes prepared by Ochieng Tom

 Account Types
Types of QuickBooks accounts

There are two main types of accounts in the QuickBooks chart of accounts:

 Balance sheet accounts

 Income and expense accounts

Balance sheet accounts

QuickBooks provides ten types of balance sheet accounts to choose from as you create and add
to your chart of accounts. The following table describes each type of balance sheet account and
the transactions you can use it for.

Use a . . . To track
Bank account: Current, savings, and term deposits. Add one bank account for every
account your company has at a bank or other financial institution. (You
can also use this type for petty cash.)

Accounts receivable
(A/R) Transactions related to the customers that owe you money, including invoices,
payments, deposits of payments, refunds, and credit able

(A/P) Accounts payable

Transactions related to money you owe, including bills, bill payments,
and any credit you have with vendors. See also current and long-term
liability accounts.

Credit card Credit card purchases, bills, and payments.

Current liability Liabilities that are scheduled to be paid within one year, such as VAT,
payroll taxes, accrued or deferred salaries, and short-term loans.

Long-term liability Liabilities such as loans or mortgages scheduled to be paid over periods
longer than one year.

Equity Owner's equity, including capital investment, drawings, and retained

earnings.

Notes prepared by Ochieng Tom

Income and Expense accounts

Income and expense accounts track the sources of your income and the purpose of each
expense. When you record transactions in one of your balance sheet accounts, you usually
assign the amount of the transaction to one or more income or expense accounts. For example,
not only do you record that you took money out of your current account, but you keep track of
what you spent the money on: utilities, perhaps, or office supplies.

QuickBooks does not display a balance for income and expense accounts in the chart of
accounts. To see income and expense account balances, choose Profit and Loss from the
Reports menu, or select the income or expense account in the chart of accounts and click
QuickReport.

What is an expense account?

An account that tracks what your company is spending. (You can think of expenses as money
that leaves the company.) They work like categories do in Quicken.
Unlike balance sheet accounts, expense accounts do not have a register of their own. You can
get a list of the transactions posted to an expense account by selecting the account in the chart of
accounts and clicking QuickReport.

Ways to organise income and expenses

QuickBooks includes important features that let you analyse your business in great detail:

 Your Chart of Accounts, including balance sheet, income, and expense accounts,
tracks all your transactions.
 Items let you track the services you provide to your clients.
 Classes let you track different segments of your business, and give you a way to
break down your income and expenses for any client or any project.

If you are a limited company

If you are a limited company, you will need to set up special accounts to record dividend
payments and corporation tax.
To set up accounts for dividends go to the Lists menu and select Chart of Accounts, and click on
the Account button. Then click on New and complete the New Account form as follows:

Each balance sheet account in QuickBooks has its own register that tracks the balance of the
account. You can also see the account balances by looking at your chart of accounts.

Account type Name

Other expense Dividend expense

Other current liability Dividends payable

Other current asset Advance corporation tax recoverable

Other current liability Advance corporation tax payable

Other expense Mainstream corporation tax

Other current liability Corporation tax payable

Notes prepared by Ochieng Tom

 Using Help.
How to use Help

Where to start

1. To find out about the window you're working in, press F1, click the Help button on the
iconbar, or choose Help from the Help menu.
2. To learn how to use QuickBooks in your type of business, choose QuickBooks and Your
Industry from the Help menu.
3. To learn about the new features in this release of QuickBooks, choose New Features for
QuickBooks 6.0 from the Help menu.

How to find the topic you want

Click the Contents button at the top of the Help window. The window that opens has three tabs at
the top: Index, and Find:

1. Index. Click this tab to look up a term in the index. Start typing the term you're looking for.
Some terms have subentries, just like any book's index. Double-click a term to open a
topic related to it.
2. Find. Click this tab to search for each instance of a word or phrase. This kind of search is
more thorough, but it may give you topics that aren't as relevant as those you find from
the Index tab.

When you've found the topic

If the topic goes beyond the bottom of the Help window, click the scroll bar at the right to read the
rest of the topic. Text in green indicates that more information is available. Click the green text to
display the information.

Some topics also contain diagrams you can click to get more information. When this is the case,
click the part of the diagram you want to know more about.

To return to a topic you read during your current session with Help, click Back.

Notes prepared by Ochieng Tom

 Getting Started
In this section you will learn about the following
features and activities:
 Installation And Registration
 Setting Up A New Company
 Passwords
 Preferences And Customisation
 Setting Up Currencies
 Setting Up The VAT Table
 Creating Accounts
 Posting Opening Balances
 Backing Up Data

Installation and Registration

Go to the:
a. Start button in windows
b. Select run option
c. Select browse
d. Install first the diskette into the computer.
e. Select drive A
f. When drive A opens, select disk 1(i.e. for CDs, select current drive)
g. Select set up
h. Open
i. OK
j. Follow instructions for installation as they appear in the dialog box.
k. Put in the Activation key and the serial.
l. The program is now installed into your computer.

Reinstalling QuickBooks

Reinstall QuickBooks if you have hard disk or other equipment problems, of if you suspect the
QuickBooks program file is damaged. Reinstalling does not affect your data file.

Uninstalling QuickBooks

1 Exit QuickBooks.
2 From Windows, click Start.
3 Click Settings, and then Control Panel.
4 Double-click the Add/Remove Programs icon.
5 From the list of programs, select QuickBooks.
6 Click Add/Remove.
7 If asked to confirm file deletion, click Yes.

Notes prepared by Ochieng Tom

Setting up a New Company.
We recommend that you use the EasyStep interview to create your QuickBooks company. The
interview walks you through the setup procedure and helps you tailor QuickBooks to suit your
business. The interview also creates, automatically, some of the QuickBooks accounts and items
you'll need.

1 From the File menu, choose New Company.

2 (Mandatory) Fill in the information for all the tabs (Welcome, Company, Preferences,
VAT, and Start Date) in the General section.
3 When you have finished the General section, do one of the following:
Click Next to continue the interview.
Click Leave to exit the interview.

Using the interview

The EasyStep interview walks you through one of these setup tasks:
Setting up a new QuickBooks company. You must be in single-user mode to do this.

If you're new to QuickBooks, read at least the first two sections of Chapter 4, Setting up your
company in QuickBooks, before using the EasyStep interview.

If you're not sure how to answer a question, you can go back and change your answer later. If
you're setting up a new QuickBooks company file, a few questions ask you to make a decision
that's not easily reversed. When this is the case, you'll see this symbol:

Passwords
On the main menu choose the file option and then select the password option. Use this to set or
change your password.

Preferences and Customisation

Customising your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and
reporting purposes. The complete list of accounts for your company is called the Chart of
Accounts. When you set up your QuickBooks company, you can choose a preset chart of
accounts designed especially for product sales businesses. This preset chart of accounts gives
you a head start in creating your balance sheet accounts, income accounts, and expense
accounts.
You may find as you review the preset chart of accounts that you need to add or delete accounts
from this list, or add subaccounts.

If you keep cash on the premises, you'll want to add an account for cash kept at the store called,
Petty Cash (Bank account).

Important: As a general rule, you should reserve the accounts on your Chart of Accounts for
broad categories, and use items and subitems to see more detail about items you've sold or
bought.

Notes prepared by Ochieng Tom

Pressing Enter moves between fields

Changes how the Enter key behaves in QuickBooks. Normally, pressing Enter is the equivalent of
clicking OK or Record (both of which close the current window). Some people, however, expect
the Enter key to move to the next field so that they can continue to enter data. If you select this
preference, the text cursor moves to the next field when you press Enter.
When this preference is on, you can record transactions by clicking OK or pressing Ctrl+Enter.
When this preference is off, you must press Tab or click in a field to move from field to field.

Where to find this preference. From the File menu, choose Preferences, and then select General
from the list on the left.

Setting preferences for sales and customers

1 From the File menu, choose Preferences.

2 In the Preferences window, select Sales & Customers from the scroll box.
3 Click the Company Preferences tab.
4 (Optional) Enter the shipping method you use most often.
When you specify a shipping method, QuickBooks automatically fills in the Ship Via field on each
sales form where the field appears.
5 (Optional) Change the default markup percentage.
6 (Optional) Enter the FOB location you use most often.
When you specify an FOB site, QuickBooks automatically fills in the FOB field on each sales form
where the field appears.
7 Select, as needed, one or more of these preferences:
 Track reimbursed expenses as income
 Automatically apply payments
 Warn about duplicate invoice numbers
8 Click OK.

Setting Up Currencies
QuickBooks uses the default currency that is set up in Windows.
When setting your currency:
1. First close the QuickBooks program.
2. Go to the settings option in windows and open the regional settings.
3. Set your date and currency from this window.
4. Close the window and re open QuickBooks.
5. Open the write cheques window and check if the correct currency symbol that you want
to use in your accounts in being reflected on the cheque.

Setting Up The VAT Table

Creating VAT codes

Use a VAT code on your sales forms to calculate the VAT on a sale or to identify exempt items. A
VAT code represents a single VAT amount that you collect at a specified rate and pay to your
VAT collection agency.

1 Display the VAT code list.

2 Choose New from the VAT code menu button.
3 Enter a VAT code.
4 Enter a description.

Notes prepared by Ochieng Tom

5 Enter the VAT rate.
QuickBooks assumes the rate is a percentage. For example, enter 7.25 if the rate is 7.25%.
6 Click OK.

Creating Accounts
Creating summary items in QuickBooks

You should set up your item list to correspond to the way your cash register summarises your
sales. QuickBooks has different types of items, but you can create all your sales items as Non-
stock part items in QuickBooks.
Here's a sample list of Non-stock part items you could create for your summary sales:

S-Sales (standard-rated)
E-Sales (exempt)
Z-Sales (zero-rated)
N-Sales (non-taxable)

You'll use these items when you enter a sales summary. If you get a more complex breakdown
from your cash register, you should create your items accordingly.

Creating Payment items for payment methods

Create Payment items in QuickBooks for each payment method you accept, and for cash you will
not deposit. Make sure to create the items according to how your bank reflects each payment
method on the bank statement. You can also have some control over how the bank separates
deposits by using separate deposit slips at the bank.
For example, if your bank lumps charges from two credit cards together on the statement, create
only one Payment item for both credit cards. If the bank handles each credit card separately,
create a different Payment item for each credit card. You may also cause the bank to create
separate deposits for each credit card by using separate deposit slips.

Here's a sample list of Payment items (you may have to abbreviate the names of your Payment
items in QuickBooks):

Cash/Cheques (if you deposit these separately, they would be two items)
Credit Card 1
Credit Card 2
Petty Cash (when creating this item, select "Deposit to" your Petty Cash account)

Important: When you create these items, make sure to select "Payment" for the item type,
and select the corresponding payment method in the Payment Method field.

You will use these items on a summary invoice to facilitate your bank reconciliation.
Creating items such as these works even if your various credit card payments are deposited
electronically every 24 hours (or other time period). In this case, your bank will list deposits from
each credit card company separately, so you would create payment items for each credit card.

Creating custom fields and customising sales forms

QuickBooks gives you several ways to adjust the appearance of your sales forms (invoices or
cash sale receipts). You can change, add or eliminate fields or columns to show the information
that's important to you and your customers.

Notes prepared by Ochieng Tom

In addition, you can add your own custom fields for items, customers, and vendors, and use
these fields in combination with fields or columns you add to your invoice or cash sale receipt.
For example, you might create a custom field for items in QuickBooks to enter the suggested
retail price (SRP) for each item. Then if you want the suggested retail price to appear on an
invoice or cash sale receipt, you would add a column called SRP to that sales form. Then
QuickBooks will automatically enter the SRP whenever you select the item on the sales form.

Here are some other examples of why product sellers might use their own custom fields,
customised sales forms, or a combination of both:

 To keep track of customers' resale numbers To enter size, colour, weight, or format
of an item (you may use subitems for this purpose instead)
 To include a unit of measurement (such as pounds)
Customising Fields
This makes it more suitable to your company needs and preferences.

1 Display the Customer:Job list, the Vendor list, or the Employee list.
2 Do one of the following:

 Click New to add a new customer, vendor, or employee to the list.

 Select any name on the list and click Edit.

3 Click the Additional Info tab.

4 Click Define Fields.
5 For each field you want to add:

 Enter the name of the field in the label column.

 Select the lists where you want the field to appear.

Restrictions. You can add up to seven fields to each list. Overlapping fields count as one field on
each list. For example, if you add the same field to all three lists, you can still add six other fields to
each list.

6 Click OK.
7 (Optional) Fill in the fields for this customer, vendor, or employee.

You'll see the new fields on the Additional Info tab.

If you fill in a field, the information you enter transfers automatically to any custom form
where the field appears. For example, if the field is named "Sales Region" and you've
entered "Far West" as the sales region for a particular customer, the Sales Region field
on your sales forms prefills to "Far West" each time you enter a sale to the customer.

Leave a field blank if you'd prefer to fill it in when you are using a business form.

8 Click OK.
9 (Optional) Fill in the fields for your other customers, vendors, or employees.

What's next
You can add custom fields you've set up for customers to any sales form. Likewise, you can add
custom fields you've set up for vendors to the purchase order form. If you want information you've
entered in the custom fields to appear on a form, you
must add the fields to the form.

Notes prepared by Ochieng Tom

Merging two list entries

In some QuickBooks lists, you can combine two list entries into one. For example, you may find
that you've been using two customer names (because of different spellings) when you really need
only one on your Customer:Job list.

Limitations

 You can merge entries only in these lists: Chart of Accounts, Item, Payroll Item,
Customer:Job, Vendor, Employee, and Other Name.
 Merging two list entries is an irreversible operation.

Instructions

1 Display the list that has the entries you want to merge.
2 Select the list entry whose name you don't want to use.
3 From the list’s leftmost menu button, click Edit.
4 Change the list entry name to the same name as the entry you're combining it with.
5 Click OK.
6 Click Yes to confirm that you want to merge the two list entries under the same name.

Creating sales forms outside of QuickBooks

Some product sales businesses may want their invoices or sales receipts to have a creative flare
consistent with their image and industry. In this case, you can use QuickBooks to calculate
subtotals and totals for your invoices or sales receipts and then create the sales form in a word
processor or desktop publishing software outside of QuickBooks.

To use another program for creating sales forms:

1. Enter invoices or sales receipts into QuickBooks as usual, but clear the "to be
printed" checkbox.
2. Manually create the invoice or sales receipt outside of QuickBooks with your
word processor or desktop publishing software.

Creating Items
Using Stock part items

Create Stock part items for the products you sell if you need the following benefits:

 When you use purchase orders to buy stock items, QuickBooks updates your stock, so
you know which items are on order and when they're due to be received.
 You can easily keep track of the cost to you of the items you have sold (the cost of goods
sold).
 You can easily keep track of the income you receive from the resale of stock items.
 You always know your current quantities on hand.
 You always know the current value of your stock.

Notes prepared by Ochieng Tom

 Using Non-stock part items
Create a Non-stock part item for each product you sell that doesn't require the tracking features
of a Stock part item.

Using Discount items

Typical discounts in product sales businesses include:
 cash discount
 early order discount
 employee discount
 volume discount
 seasonal discount
 trade discount
 special customer (senior, child, preferred)
These Discount items can be created as percentages or as fixed-amount discounts

Using Group items for special discounts

Suppose you want to give a special discount on an item for promotional purposes or to sell an item quickly.

Using subitems for volume pricing and other reasons

In addition to using items, you might want to use subitems as well. Product sales businesses
have many uses for subitems. Here are a few possible uses. It's important to remember that you
should not mix these uses; you should use subitems for a consistent purpose.

Using subitems for volume pricing or varying weights and sizes

You may set up various price levels for products according to the volume bought by the customer.
Generally, the higher the volume, the lower the price. Create an item for the product (make the
quantity on hand zero and the reorder point zero) and then create subitems for each price level.
Enter the quantity on hand and reorder point for each subitem. For example
1. T-Shirt

 T-Shirt 1-5
 T-Shirt 6-12
 T-Shirt 13-20

You might also sell products in various sizes. You may want to create one item for the product
and then several sub-items for the sizes of the product.

Grouping items

If you want to group some items together because these items are frequently sold together, you
can use QuickBooks to track the cost of a group of items. Many product sales businesses find it
convenient to group items.

Notes prepared by Ochieng Tom

What are QuickBooks lists?

Lists are the framework of QuickBooks. You use lists to fill out most QuickBooks forms. For
example, to write an invoice, you choose the name of one of your customers from your
Customer:Job list. QuickBooks enters the information on the form for you. This saves you time
and prevents typing errors. Another bonus, you can change the information on the form as
needed.
Lists are easy to set up in QuickBooks, but some require careful planning, like your Chart of
Accounts, Items, and Class lists.

Adding new accounts

When should you add new accounts?

1 Display the Chart of Accounts.

2 Choose New from the Account menu button.
3 In the New Account window, choose the type of account from the Type drop-down list.
4 Enter the account's name in the Name field.
5 If you use account numbers, enter the account's number in the Number field. (appears
only if "use account number" feature has been turned on)
6 (Optional) Enter a short description of the account in the Description field.
7 (Optional) Enter a bank or credit card number for this account.
8 If you want to make this account a subaccount of another account, select the
"Subaccount of" checkbox. From the drop-down list, select the account that will be the
higher-level account for this subaccount.
9 (For income and expense accounts) In the Tax Line field, choose the appropriate tax line
or <Not tax-related>.
10 (For balance sheet accounts) Enter an opening balance based on the account’s balance
as of your QuickBooks start date. If you’re not sure of the balance, you can leave the field
blank and enter the information later.
11 (For expense accounts only) To track reimbursed expenses as income, click "Track
reimbursed expenses in:", then choose the appropriate income account from the Income
Account drop-down list. Also, enter a VAT code in the "Ususal VAT code" field.
12 Record your information about the new account.

Making an inactive entry active

1 Display the list that contains the inactive entry.

2 Click Show All.
3 Click the symbol shaped like a hand (it's to the left of the list entry).
4 If the list has subentries, click Yes or No to indicate whether you want the subentries to
be active again.

Changing fonts (cheques, graphs, labels, lists, pay slips, reports)

1 Display the Printer Setup window, or the Print window for the form you're working with.

2 If you have the Printer Setup window displayed, select the form you wish to change in the
Form Name field.
3 Click the Fonts tab.
4 Click the button for the element whose font you want to change. Different forms have
different font options.
If you are changing the font for a report, choose Default Fonts. Make a choice in the
Change Font for field.
5 Choose the font characteristics you want, and click OK.

Notes prepared by Ochieng Tom

Exporting lists to another QuickBooks company

You can export part or all of your company lists to another QuickBooks company. For example, if
you work with two different QuickBooks companies, you might want to export a list of vendors you
created in the first company to the second company.

Important. This procedure does not export transactions. For details on how to export transaction
data to another program, click How To.

1 Make a backup copy of the QuickBooks company that will receive the list information.
2 Open the company that contains the lists you want to transfer.
3 From the File menu choose Export.
4 In the window that appears, click the lists that you want QuickBooks to include in the
export file.
5 Click OK.
6 Enter a filename for the export file.
7 Click Save.
8 From the File menu, choose Close Company.
9 From the File menu, choose Open Company. Select the filename of the company you
want to import into, and click Open.
10 From the File menu, choose Import.
11 Select the export file you just created and click OK.

QuickBooks adds the list information in the export file to the company file. For example, if "Bartel
Insurance" is on the Vendor list in the export file, QuickBooks adds "Bartel Insurance" to the
Vendor list in the company file.

When the two files happen to have identical list entries, QuickBooks updates the information for
those entries in the company file. For example, if the export file lists the address of "Bartel
Insurance" as "4565 Hermosa Lane" and the company file lists the address as "20300
Commerce," QuickBooks changes the address in the company file to "4565 Hermosa Lane."
When the two files have many duplicate entries, make sure that the export file contains the most
current information.

Transferring reports, lists, and registers to another program

You can transfer the information in any QuickBooks report, list, or register to other programs,
such as word processors, spreadsheets, or database programs. This gives you the ability to work
with the information in ways that would be impossible in QuickBooks. For example, you could
include your company balance sheet in a document you are writing, or create a database from
your Customer and Vendor lists.

1 Display the report, list, or register.

2 From the File menu, choose Print.
3 If you are transferring a register, enter the date range of the transactions you'd like to
transfer.
4 In the "Print to" section, select the file format you want to use.
5 (Optional) If the report, list, or register is long and you only want to transfer part of it, click
Pages. Then enter the beginning and last page numbers of the section you want to
transfer.
6 Click Print.
7 Enter a filename for the disk file.
8 Choose the drive and directory where you want the file to reside.
9 (ASCII files only) Enter the number of lines per page and the width of each line.

Notes prepared by Ochieng Tom

Lines Per Page. When this number is 0, the ASCII file is one long continuous page with no page
breaks. If you set Lines Per Page to a number other than zero, your ASCII file will have a page
break after each group of lines of the number you specify. Each "page" in the ASCII file has a
title, and any other header or footer information, such as column headers and page numbers.

Width. This number controls the width of lines in the file. Enter the maximum number of
characters you want per line (80 works well in many cases).

10 Click OK.
11 Go to the program where you want to use the report, list, or register. Open the disk file
you just created.

How to use registers

Each register is a record of all activity that affects that account’s balance. You can use your
account registers to enter most transactions (cheques, bills, deposits, etc.) as well maintain the
account (make adjustments, void transactions, etc.)

RegisterA list of transactions, similar to the register of your chequebook. QuickBooks has
a register for each balance sheet account (except the equity account called Retained
Earnings).

Register QuickReport

This report shows, in chronological order, all the transactions related to the name or payee who
appears on the transaction you selected. For example, if you selected an invoice to Lynn Favour,
the report shows all the sales to Lynn Favor and all the payments received from Lynn Favour
recorded in the account register.
Initially, the report shows transactions for all dates. You can restrict the period covered by
choosing a different date range from the Dates list.
To display any of the transactions listed, double-click the transaction's entry in the report.

To create this report. In the register, select the payee about whom you want a report. Then click
Q-Report.

Editing a transaction in a register

You can make edits to transactions in registers. This can save time if the transactions you want to
edit have relatively few distribution lines and you do not need to track the costs of specific items.

Restrictions. You cannot edit a VAT payment. You can edit split amounts for cheques (CHQ),
deposits (DEP), credit card charges (CC), credit card credits (CC CRED), bills (BILL), and vendor
credits (BILLCRED) if all the amounts are assigned to expense accounts. (If any amount is
assigned to an item, you must select the transaction and click Edit to edit the split amounts). For
all other kinds of transactions, only certain fields can be edited directly in the register. To edit one
of these transactions without restrictions, select the transaction and click Edit to display the
transaction in its complete form.

To edit transactions in a register

1 From the Lists menu, choose Chart of Accounts.

2 Double-click on the appropriate account to open its register.
3 Select the transaction and make the necessary changes.

Notes prepared by Ochieng Tom

 If you can’t find the transaction, refer to Scrolling through a register and Jumping to a
transaction in a register.

4 Click Record to save your changes.

Entering a transaction in a bank account register

You can enter cheques and deposits directly in a bank account register instead of using the Write
Cheques window and the Make Deposits window to create the transactions. In QuickBooks, a
bank account register can represent a current, savings, or petty cash account.

1 Open the register for the account you want to use.

2 Click in the blank entry at the end of the register.
3 Enter the date, cheque or deposit number, and payee in these fields:

 Date
 Number
 Payee
4 Enter the amount:

 For cheques and fees. Enter the amount in the Payment field.
 For deposits and interest earned. Enter the amount in the Deposit field.

5 (Cheques only) Enter the name of the account you use to track this type of expense.

If you are distributing the entire cheque to one account and you don't need to assign the
amount to a customer, job, or class, choose the account from the drop-down list.
Or, click Splits.

6 (Deposits only) Enter the name of the account that is the source of the funds you are
depositing.

For example, if you converted a short-term asset into cash and you now want to add the cash to
your current account, you would enter the name of the short-term asset account.

7 (Optional) In the Memo field, enter a note about the transaction.

The memo appears on all reports that include the transaction, and, in the case of cheques, near
the bottom of the cheque face.

8 Click Record.

Did the transaction disappear?

If you sort the register by date and you dated your transaction earlier than today, the transaction
may disappear from view after moving to its correct chronological position in the register.

Entering split transactions

When you are entering a transaction in a register, you can "split" the transaction to different
accounts, customers, jobs, or classes, so that you can keep track of how much you're spending
on each account, customer, job, or class. For example, you may want to write a cheque to a
vendor to pay for materials you used on two different jobs.

Restriction. From a register, you cannot view or enter a split transaction that tracks items.

Notes prepared by Ochieng Tom

To enter a new split transaction

1 Click in the blank entry at the end of the register.

2 Enter the payee, vendor, or name.
3 In the Payment field, enter the total amount of the transaction.

If you don't know the total. Leave the Amount field blank. QuickBooks totals the amount as you fill
in the splits and displays it in the Payment field.

4 Click Splits.
5 In the Account field, enter an account.
6 In the Amount field, enter the amount to be assigned to this account.

QuickBooks subtracts the amount entered from the total amount and displays the remainder on
the next free line of the Splits window. If you left the transaction amount blank, QuickBooks adds
the split amount to the transaction amount.

7 (Optional) In the Memo field, enter a note about the split amount.
8 In the Customer:Job field, enter the name of a customer or job.
9 If this expense should not be passed along to the customer, click in the column to mark
as "X" through the icon.
10 If you are tracking class information, enter a class in the Class field.
11 Repeat steps 5 through 10 as needed.
12 Click Record to record the transaction.

Using the accounts payable register

The accounts payable register lists, in order by date, all the bills, payments, and credits related to
your vendors. You can enter new bills directly into the register and quickly open any transaction
listed.

Notes prepared by Ochieng Tom

Moving About in a Register.

You can also use these keys to move to different parts of a register:

Move up one screenful at a time. Page Up

Move down one screenful at a time. Page Down
Go to the beginning of the current month. (Press Ctrl + Page Up again to go to the
previous month)
Go to the beginning of the next month. Ctrl + Page Down
Go to the beginning of the register. Ctrl + Home
Go to the end of the register. Ctrl + End

Moving a transaction to a different account

If you enter a transaction into the wrong account, you can usually correct your mistake without
having to re-enter the transaction.

1 Open the register where you mistakenly entered the transaction.

You can’t move these types of transactions, and instead need to delete and re-enter them: bill
payments to vendors (BILLPMT), pay cheques to employees (PAY CHQ), VAT payments, and
payroll tax/liability cheques (LIAB CHQ).

2 Select the transaction.

3 From the Edit menu, choose Copy Transaction.

In the menu, the word "Transaction" changes depending upon the type of transaction you have
selected in the register. For example, if you have selected a cheque, the command is Copy
Cheque. Do not choose the Copy command, which appears above the Copy Transaction
command.

4 Open the register for the correct account. Click in the blank transaction at the bottom of
the register.

Restriction. You can copy and paste a transaction only between registers that accept the same
types of transactions. For example, all bank transactions and credit card transactions have similar
fields, so you can copy and paste a bank transaction into a credit card register. On the other
hand, you cannot paste an A/R transaction (such as an invoice), or an A/P transaction (such as a
bill) into a bank account register.

5 From the Edit menu, choose Paste.

6 Click Record to save the transaction in the new register.
7 Delete the transaction from the original register.

Using the accounts receivable register

The accounts receivable register lists all the invoices, payments from customers, and credit
memos you've entered. While you cannot enter transactions directly in this register, you can
easily open the transactions from the register.

Editing a transaction in a register

You can make edits to transactions in registers. This can save time if the transactions you want to
edit have relatively few distribution lines and you do not need to track the costs of specific items.

Notes prepared by Ochieng Tom

Restrictions.
You cannot edit a VAT payment. You can edit split amounts for cheques (CHQ), deposits (DEP),
credit card charges (CC), credit card credits (CC CRED), bills (BILL), and vendor credits
(BILLCRED) if all the amounts are assigned to expense accounts. (If any amount is assigned to
an item, you must select the transaction and click Edit to edit the split amounts). For all other
kinds of transactions, only certain fields can be edited directly in the register. To edit one of these
transactions without restrictions, select the transaction and click Edit to display the transaction in
its complete form.

To edit transactions in a register

1 From the Lists menu, choose Chart of Accounts.

2 Double-click on the appropriate account to open its register.
3 Select the transaction and make the necessary changes.

If you can’t find the transaction, refer to Scrolling through a register and Jumping to a transaction
in a register.

4 Click Record to save your changes.

Restoring a register

If you are adding an entry to a register (or editing an existing entry) and make an error, you’ll want
to cancel the entry or edits. To do this, click the Restore button.

What if I’ve already clicked Record?

To remove a recorded transaction from the register, use the delete function from the Edit menu or
press Ctrl +D.

Transferring funds from an account register

You can transfer funds between any two balance sheet accounts in your chart of accounts. For
example, you may need to transfer funds from a savings account to a current account to cover
your weekly payroll.

1 Open the register for the account from which you want to transfer funds.
2 At the end of the register, enter a transaction to transfer the funds:
 Leave the Number and Payee fields blank.
 In the Account field, enter the account you want to transfer the funds to.
 Enter the amount to transfer in the Payment column.
 (Optional) In the Memo field, you may want to add a description of this transaction.

3 Click Record.

Entering a charge or payment in a credit card register

Each credit card has its own register that lists all the charges and credits you've recorded and the
payments you've made. You can enter new charges and payments directly in the register.

1 Open the register for the credit card account you want to use.
2 Click in the blank entry at the end of the register.

Notes prepared by Ochieng Tom

3 In the Vendor field, enter the name of the vendor you purchased the goods or services
from.
4 (Charges only) In the Charge column, enter the amount of the charge.
5 (Payments only) In the Payment column, enter the amount you paid on the credit card
bill.
6 Enter the name of the account you use to track this type of expense. If you need to
distribute the charge to multiple accounts or assign it to a customer:job or class, click
Splits. See How to enter split detail from help.
7 (Optional) In the Memo field, enter a note about the transaction.

The memo appears on all reports that include the transaction.

8 Click Record.

Notes prepared by Ochieng Tom

Table of transaction type codes

These are the transaction codes that can appear in an account register. They identify the type of
transaction (bill, invoice, etc.). Purchase orders, pending invoices, and estimates (in QuickBooks
Pro) do not have transaction codes because they never post to an account.

This code Represents

BILL Bills from vendors. You enter bills in the Enter Bills window. You can also enter
them directly in your A/P register.
BILLCRED Credits from vendors. You enter vendor credits in the Enter Bills window.
BILLPMT Payments to vendors. You enter the payments in the Pay Bills window.
CREDMEM Credit memos to customers. You enter credit memos in the Create Credit
Memos/Refunds window.
CC Credit card charges. You enter credit card charges in the Enter Credit Card
Charges window. You can also enter them directly in a credit card account
register.
CC CRED Credit card credits. You enter credits in the Enter Credit Card Charges window.
You can also enter them directly in a credit card account register.
CHQ Cheques. You enter cheques in the Write Cheques window. You can also enter
them directly in a bank account register.Note that QuickBooks has separate
codes for pay cheques (PAY CHQ), payroll liability cheques (LIAB CHQ),
cheques automatically generated when you pay bills (BILLPMT), and cheques
generated when you pay VAT.
DEP Bank deposits. You enter bank deposits in the Make Deposits window. You can
also enter them directly in a bank account register.
GENJRNL General journal entries. These are debit and credit entries in the General Journal
Entry window. You can also enter them directly in an asset, liability, or equity
account register to make adjustments to these types of accounts (QuickBooks
does not provide data entry forms for these types of accounts).
INV Invoices. You enter invoices in the Create Invoices window.
ITEM RCPT Item receipts. An item receipt indicates you have received items you ordered, but
you have not yet received a bill from the vendor. You enter item receipts in the
Create Item Receipts window.
LIAB CHQ Cheques for payroll taxes and other payroll liabilities. You enter these cheques in
the Liability Cheque window.
PAYROLL Payments made for Giro and BACS. You enter these payments in the Select
Employees to pay window and Preview pay cheques windows.
PAY CHQ Pay cheques to employees. You enter pay cheques in the Select Employees to
Pay and Preview Pay cheques windows.
PMT Payments from customers. You enter customer payments in the Receive
Payments window.
RCPT Cash sales receipts. You enter sales receipts in the Enter Cash Sales window.
TRANSFR Transferred funds. You can transfer funds using the Transfer Money window or
between any two balance sheet accounts registers.

Notes prepared by Ochieng Tom

 Posting Opening Balances

Entering opening balances for A/R and A/P accounts

(i.e. Accounts receivable and Accounts Payable)

This will fall under the area of financial information that is part of this financial year, but before
your QuickBooks start date

As you enter your customers and vendors in QuickBooks, enter an opening balance with an as of
date equal to your start date. To view this information for existing customers, use the customer’s
register.
When you enter the opening balance for your customers, you’re building the accounts receivable
opening balance. When you enter the opening balance for your vendors, you’re building the
accounts payable opening balance.
See Adding a customer and Adding a vendor.

To enter a year-to-date opening balance for your income accounts

1 From the Chart of Accounts, double-click the Opening Bal Equity account.
2 Go to the blank line at the bottom of the register.
3 In the Decrease column, enter the total year-to-date amount of your income.
4 Click Splits.
5 In the Account column, enter an income account.
6 In the Amount column, enter the amount received to date for this account.
7 Repeat steps 5 and 6 for all income accounts with a balance.

8 Click Record when done.

To enter a year-to-date opening balance for your expense accounts

1 From the Chart of Accounts, double-click the Opening Bal Equity account.
2 Go to the blank line at the bottom of the register.
3 In the Increase column, enter the total year-to-date amount of your expenses.
4 Click Splits.
5 In the Account column, enter an expense account.
6 In the Amount column, enter the amount of the incurred expenses for this account.
7 Repeat steps 5 and 6 for all expense accounts with a balance.

8 Click Record when done.

Backing Up Data.
QuickBooks has made it easy for you to back up your data. You can do this through the main file
menu or through the navigator window. You have the option of backing up either on your hard
disk or your floppy disk. Simply select the backup option and specify the location of your backup
data and quickbooks will do the rest for you.

Reasons for Backing Up:

1. Protection from computer crashing/data loss
2. Virus attacks
3. To move files from one computer to another
4. Your working data is damaged

Notes prepared by Ochieng Tom

 5. Your hard disk has malfunctioned
6. You want your data to revert to the state it was in at an earlier date.

Back up Strategy

It is a good idea to back up every day. One way is to have a set of disks and label them Monday to
Friday. Back up your work on Monday in the Monday diskette and so on. This allows for easy data
tracking. Put a copy of your backup at home or at a different place from where you work as an
additional precaution. This is only a suggestion of course you may come up with a backup strategy of
your own that suits you better.

Backing up your data

1 If you are backing up to a floppy disk, put the disk in a disk drive.
2 From the File menu, choose Back Up.
3 (Optional) Change the name that QuickBooks suggests for the backup file. (All
QuickBooks back up files require a QBB extension.)
4 (Optional) Change the suggested location for the backup file.

If you are backing up to a floppy disk, choose your floppy drive from the window.

5 Click Save.

If you need more than one disk

QuickBooks asks you to insert an additional disk as each disk fills up. Be sure to label the disks
so that you'll know which one was first, which was second, and so on. This will help you if you
ever need to restore the data from the disks.

What the backup command does

The QuickBooks Backup command does not simply copy the data for your QuickBooks company.
Instead, it compresses the data into a compact file that is smaller than your company file. To
open a backup file, choose Restore from the File menu.

Restoring data you've backed up

If you have created a backup copy of your company data, you can bring the backup copy back
into QuickBooks by using the Restore command.

Restoring:

1 If the backup copy is on a floppy disk, put the disk in your floppy disk drive.
If the backup copy is on several disks, insert the first disk in the disk drive.
2 From the File menu, choose Restore. QuickBooks automatically closes because you
cannot have two company files open at the same time.
3 If the name of the backup file doesn't appear in the list, choose the location that contains
the backup copy.
4 In the list, select the backup file and click Open.
Note. The backup file will have a QBB extension.
5 In the Restore To window, enter a name for the new company file.
6 (Optional) If you want the new company file to be in a different location than where you
installed QuickBooks, choose the location where you want to put the file.
7 Click Save.
8 Respond to any messages QuickBooks may display.

Notes prepared by Ochieng Tom

 If QuickBooks finds a company file with the same name in the folder you specified,
QuickBooks asks you if you want to replace the existing file. If you click Replace, QuickBooks
erases the existing file from your hard disk and replaces it with the file you are restoring. To be
absolutely safe, click Cancel and give the file you are restoring a different name.
If your backup file spreads over more than one disk, QuickBooks asks you to insert the
next disk.

What the Restore command does

Restore creates a new QuickBooks company using the data from the backup copy.

QuickBooks 6.0
Practise Exercises.

Chapter 1 Getting Started

 Set up a company with the following details: Kristal General Traders Ltd., P O Box 582189,
Nairobi. Kenya. TEL: 58000, Fax 58001. Set up this company with the default set of accounts
provided by Sage.
 Set up the financial year to start at January this year.
 Set up VAT rates of 16%, 18% and 21%.
 Create a general income account from the Chart of accounts window. (Account Type is
Income)
 Check that the default currency in your accounts is the Kenya Shilling.
 Set up a budget of 100,000/= per month for the whole year for the General Income account.
 Create a computer Equipment account and a Computer Equipment Depreciation account in
the Chart of accounts window. (Account Type is fixed Asset)
 In the Chart of accounts window create the following accounts:
a. Bank Current Account (Account type is Bank)
b. Petty Cash Account (Account Type is Bank)
c. Create a salaries payable account (Account type is Other Current Liability)
d. Create a staff loans account. (Account type is Other Current Asset)
e. Create a directors loan account. (Account type is Long Term liability.)

Notes prepared by Ochieng Tom

 Post the opening balances as per the closing balance sheet provided for Kristal General
Traders Ltd. for the period ended 31st December _____.

Jungle Tours and Safaris

Balance sheet as at 31st December, __________

Assets Liabilities & Owners Equity

Accounts Payable
Furniture & Fittings 100000 (See list below) 350000
Furniture & Fittings Acc.
Depreciation -10000 Accruals 55000
Office Equipment 50000 VAT Liability 120000
Office Equipment Acc.
Depreciation -5000 NIC Bank Loan 1000000
Motor Vehicle 500000 Directors Loan 2500000
Motor Vehicle Acc.
Depreciation -100000 Share Capital 500
Computer Equipment 300000 Reserve Account -730,500
Computer Equipment Acc.
Depreciation -30000
Barclays Bank Current A/c 500000
Standard Bank Deposit A/c 1200000
Petty Cash Account 15000
Accounts Receivable
(See list below) 600000
Prepaid Rent 100000
Rent Deposit 25000
Staff Loans 50000

Notes to the accounts:

Accounts Receivable (Debtors List)
Motherland Motors 350,000/=
Mitsubishi Corporation 150,000/=
Daewoo Motors 100,000/=

Accounts Payable (Creditors List)

Image Stationers 50,000/=
Group Four Security 75,000/=
Action Plus Services 125,000/=
Six Giants Enterprises 99,500/=

Notes prepared by Ochieng Tom

 Overview of Items and Stock Tasks
In this section you will learn about the following activities:
1. Creating and Using Items
2. Buying and Paying for Stock
3. Selling Stock
4. Adjusting Stock

Item.
In QuickBooks, items help you fill out the line item area of a sales or purchase form quickly. When
you choose an item from your Item list, QuickBooks fills in a description of the line item and
calculates its amount for you.
QuickBooks provides eight different types of items. Some—such as the service item or the stock
part item—help you record the services and products your business sells. Others—such as the
subtotal item or discount item—you use to perform calculations on the amounts in a sale.

When to use QuickBooks items

Which item type should you use?
QuickBooks provides eight different types of items to help you fill out sales and purchase forms
quickly.

Use this type For:

Service Services you either charge for or purchase. Examples include specialised
labour, consulting hours, and professional fees.

Stock part Merchandise or parts you purchase, track as stock, and then resell.

Non-stock part Materials or parts you buy but don't keep on hand as stock. These items
can be either part of your overhead (for example, office supplies), or they
can be materials you buy to finish a specific job and charge back to your
customer.

Other charge Miscellaneous charges that are not services, labour, materials, or parts.
Examples include delivery charges, setup fees, and service charges.

Subtotal Calculating a subtotal.

Group Fast entry of a group of individual items already on the Items list

Discount An amount to be subtracted from a total or subtotal.

Payment Payment you receive at the time you write an invoice. A payment item
reduces the amount owed on an invoice.

Notes prepared by Ochieng Tom

 Creating items for stock
Setting up for stock

Setting up to track stock requires three steps:

1 Turn on stock tracking.
2 Set up the accounts you need.
3 Add stock part items to your Item list.

Turning on stock and purchase orders

1 From the File menu, choose Preferences.

2 Select Purchases & Vendors from the list on the left and click the Company Preferences
tab.
3 Select the "Stock and purchase orders are active" checkbox.
4 Change, as needed, these preferences:

Warn if not enough stock to sell

Warn about duplicate purchase order numbers

5 Click OK.

Creating Stock Items

Use stock part items to represent materials or parts you buy, track as stock, and then resell.
Through stock part items, you can keep track of how many items remain in stock after a sale, how
many items you have on order, your cost of goods sold, and the value of your stock. Note that
QuickBooks does not track stock through the manufacturing process.

Important. Do not create separate stock part items for sales and purchases. You must use the
same stock part item on both sales forms and purchase orders to keep the stock accurate.

1 From the Lists menu, choose Items.

2 From the Item menu button, choose New.
3 From the Type drop-down list in the New Item window, choose Stock Part.
4 Enter an item name or number.

What you enter here appears on the drop-down list of items when you are filling out a sales form
or purchase order. Enter a name or number that will help you distinguish this item from all the
others on the list.

5 If this item is a subitem of an existing item, select the "Subitem of" checkbox and specify
the other item's name.
6 Fill in the Purchase Information fields.
7 Fill in the Sales Information fields for information you show to customers.
8 Fill in the Stock Information fields for easy reordering of stock.
9 (Optional) Click Custom Fields to fill in or define custom fields for this item.
10 Record the item.

Notes prepared by Ochieng Tom

 Stock part item
In QuickBooks, a stock part is one of the types of line items you can use when you are filling out a
sales or purchase form. You use stock items to track merchandise your business purchases,
keeps in stock as stock, and then resells. For each stock item, QuickBooks tracks the current
number in stock and the value of your stock after every purchase and sale.

Non-stock part
In QuickBooks, a non-stock part is one of the types of line items you can use when you are filling
out a sales or purchase form. You use non-stock part items to track merchandise that:

 You purchase but do not resell.

 You sell but do not purchase.
 You purchase and resell but do not track as stock.

Accounts needed for stock

You need at least one each of the following types of accounts in your chart of accounts to track
stock. Follow these guidelines when you set up the accounts:

 Stock value (account type = Other Current Asset): This account tracks the current value
of your stock.
 Sales (account type = Income): This account tracks the income from the resale of stock
items.
 Cost of goods sold (account type = Cost of Goods Sold): This account tracks the cost to
you of the items you have sold. On a profit and loss report, QuickBooks subtracts the
total cost of goods sold from your total income to provide a gross profit before expenses.

For any of these accounts, you can set up sub-accounts within the account to track the value,
income, or costs of different types of stock.

Buying Stock
Buying stock over-the-counter

When you pay for and receive items on the spot, use either the cheque or the credit card form to
record the purchase.

1 From the Activities menu, choose:

 Write Cheques, if you wrote a cheque, or if you paid with cash and you have a petty
cash account set up.
 Enter Credit Card Charges, if you paid by credit card.

2 Make sure the account is the one you want to use.

3 In the "Pay to the Order of" or "Purchased From" field, choose from the drop-down list or
enter a new name.
4 Enter the amount of the cheque in the £ field. If you leave this field
blank, the amounts you enter in the detail area of the cheque will total
automatically and display here.

Notes prepared by Ochieng Tom

5 Fill in the remaining information in the cheque or credit card form in the top part of the
window.
6 Click the Items tab. You can edit items that were entered from your purchase order
and/or enter new items.
7 To enter shipping charges or taxes not associated with any one item, click the Expenses
tab. In the detail area, enter each charge and associate it with its correct expense
account.
8 (Optional) Click Recalc.
9 Record the transaction.

Paying for stock

How you pay for stock depends upon the situation.

 For an over-the-counter purchase, enter a cheque or credit card receipt.

 If you've entered an item receipt for stock, but the bill hasn't arrived yet, enter the bill
when the item receipt arrives. You then pay the bill just like you would pay any other
QuickBooks bill.
 If you've entered a bill for stock you've received, pay the bill just like you would pay any
other QuickBooks bill.

For transaction where you buy stock on credit you will record the purchase through the creditors
Enter Bills option.

Selling stock to customers

When you sell items from stock, QuickBooks not only helps you fill in the sales form quickly but
also keeps track of how many items remain in stock after the sale. As you sell items, QuickBooks
assumes that you are reducing the value of your stock by the number of items sold times the
average cost per item. Thus, a sale does not affect the average cost.

 If you will receive payment later, create an invoice.

 If you have received full payment at the time of sale, enter a cash sale.
After you enter a sale, QuickBooks does the following:
1. It increases your sales income by the amount of each line item.
2. It adjusts your cost of goods sold by the result of (quantity sold times average
cost of each item).
3. It enters a transaction in your stock register for each item sold.

Adjusting Stock
Why would I need to adjust my stock?
Although Quickbooks automatically adjusts your stock quantities after every purchase and sale,
you need to adjust them yourself from time to time. If the quantities change from time to time for
instance because of fire, theft or breakage, you will need to adjust the quantity on hand.
When you adjust the quantity, Quickbooks assumes that the average cost of the item remains the
same and adjusts the value accordingly.
You can also adjust the average value of items in stock because of such things as spoilage or
changes in seasonal demand.
1 From the Activities menu, choose Stock, and then choose Adjust Qty/Value on Hand.
2 Change the date, if appropriate, and enter a Ref. No. (optional).
3 Enter the name of the account where you track stock loss and shortages.
4 For each stock item whose quantity has changed, enter either the new quantity or the
quantity difference.
5 (Optional) Edit the value of the stock.
6 Record the adjustment.

Notes prepared by Ochieng Tom

QuickBooks 6.0
Practise Exercises.

Chapter 2 Products And Stock

1. Record the followings products
Product Name Tee-shirts Safari Boots Tents
Non stock
Product type Part Stock Part Stock Part
General
Income account Income General Income General Income
VAT 18% 18% 18%
Sales price 500 1500 10000
Opening Stock Quantity 25 10
Cost 500 7000

2. On the 25th of January, record that you have received 10 tents into stock and 30 pairs of
Safari boots.
3. Assume that you conducted a sock take at the end of January. The quantity in your records
does not agree with the actual stock at hand. Adjust the levels of tents downwards by 1 and
the level of Safari boots downwards by 3 pieces
Selling stock.
See Customers’ product invoicing
Sales Returns
See suppliers’ credit notes
Buying and Paying for Stock.
See suppliers and cash transactions

Notes prepared by Ochieng Tom

Creditors Transactions

In this section you will learn about the following

activities:
1. Suppliers Record
2. Entering Bills
3. Credit Notes
4. Paying Bills
5. Recording costs

Suppliers Record

Adding a vendor

You can add new vendors to the list at any time. QuickBooks uses the Vendor list to hold
information about the people and companies you do business with. For example, this list could
include the phone company, and your office supplies vendor.

1 From the Lists menu, choose Vendor.

2 Choose New from the Vendor menu button.
3 In the Vendor field, enter the name of the vendor as you'd like it to appear on your
Vendor list.

For example, if the vendor is an individual and you list individuals last name first, that's how you
should enter the name.

4 Enter the information requested on the Address Info tab and Additional Info tab.
5 Record the vendor.

Vendor type

Vendor types let you categorise your vendors in ways that are meaningful to your business. For
example, you could set up your vendor types so that they indicate which industry a vendor
represents, or a vendor's geographic location.
You can create reports and do special mailings that are based on your vendor types. For
example, if you own a construction company and use subcontractors, you might want to use the
ones closest to each job. You could create a QuickBooks report that shows the subcontractors in
each geographic area.

Merging two list entries

In some QuickBooks lists, you can combine two list entries into one. For example, you may find
that you've been using two customer names (because of different spellings) when you really need
only one on your Customer:Job list.

Limitations

 You can merge entries only in these lists: Chart of Accounts, Item, Payroll Item,
Customer:Job, Vendor, Employee, and Other Name.
 Merging two list entries is an irreversible operation.

Notes prepared by Ochieng Tom

 Instructions

1 Display the list that has the entries you want to merge.
2 Select the list entry whose name you don't want to use.
3 From the list’s leftmost menu button, click Edit.
4 Change the list entry name to the same name as the entry you're combining it with.
5 Click OK.
6 Click Yes to confirm that you want to merge the two list entries under the same name.

Vendor open balance report

This report lists the outstanding bills for the vendor whose name you selected. You can see, at a
glance, how much your company still owes on each bill, as well as the total amount your
company owes the vendor.
Initially, the report shows transactions for all dates. You can restrict the period covered by
choosing a different date range from the Dates list.
The Open Balance column shows the amount due for each bill. The Amount column shows the
amount originally billed to your company. When the open balance is less than the original
amount, the difference is the amount that your company has paid on the bill as of the ending date
of the report. For example, if the original amount of a bill is £300.00 and the open balance is
£200.00, that means your company has paid £100.00.

To display any of the transactions listed, double-click the transaction.

To create this report. In the Vendor list, select the vendor about whom you want a report. Then
choose Open Balance from the Report menu button.

Changing an existing opening balance for an account

1 Display the Chart of Accounts.

2 Double-click the appropriate account.
3 Find the account’s opening balance transaction in the register.
4 If you are changing your QuickBooks start date, change the date of this transaction to
that date.
5 Change the amount to the correct opening balance.
6 Click Record.

Entering Bills

Entering a bill for expenses

You can enter a bill for any kind of expense you track through expense accounts.

1 Display the Enter Bills window.

2 In the Vendor field, choose or enter a new vendor.

What if I already have a purchase order for this vendor?

3 (Optional) Change the date of the bill.

4 In the Amount Due field, enter the amount of the bill.
5 Complete the Ref No, Terms, and Memo fields as needed.
6 In the detail area, assign the bill to one or more expense accounts.

Notes prepared by Ochieng Tom

7 (Optional) To correct mistakes in the detail area, you can click Clear Splits
or Recalc.
8 (Optional) Use the Split VAT, Combine, or Add on buttons to change the VAT amount on
each line of the detail area.

9 Record the bill.

Credit Notes

Entering a credit, refund, or discount

If you receive credit from a vendor, you can enter the credit amount in the Enter Bills window.

1 Display the Enter Bills window.

2 At the top of the Enter Bills window, click Credit.
3 Enter the amount of the credit.
4 In the detail area, enter the expense accounts, customers, jobs, or classes to which you
want to assign the credit.
5 (Optional) Use the Split VAT, Combine, or Add on buttons to change the VAT amount on
each line of the detail area.
6 Record the credit.

Paying Bills

After you enter a bill, you should pay it from the Pay Bills window rather than just by writing a
cheque. This video shows how the Pay Bills window saves you time.

From the Pay Bills window, you can pay with:

A cheque
A credit card payment
Cash

Setting the due date for bills

1 From the File menu, choose Preferences.

2 In the Preferences window, select Purchases & Vendors from the list on the left.
3 Select the Company Preferences tab
4 In the "Bills are due" field, enter the number of days after which you want QuickBooks to
regard a bill as due.

QuickBooks uses the due date to determine when to add the bill to the "Bills to pay"
section of your Reminders list.

5 (Optional) Indicate if you want QuickBooks to warn you when you enter a duplicate bill
number.
6 Click OK.

Notes prepared by Ochieng Tom

 Recording costs
Overview
If you would like to create job cards, you should record all your costs for a specific customer:job
whether you invoice based on costs or fixed bids. That way, you can create QuickBooks reports
to see how well you're doing on all your jobs.

To record costs:
From the Activities menu, choose Write Cheques, Enter Bills, or Enter Credit Card Charges.
If you pay for items by cash, use the Splits feature in your Petty Cash account register.

1. Enter the expense account that corresponds to the item you're paying for and that
you'll eventually be charging your customer for. (Remember, you may have set up
expense accounts to match your item names.)
2. Make sure to specify the Customer:Job for every transaction you enter for this job.
3. If you are using class tracking, specify a class for every transaction.
4. If your job is fixed-price, don't pass through the costs to your customer. Tick the
billable column (the billable column is indicated by the invoice icon); the invoice icon
is crossed out with an X.
5. If your job is cost plus or time and materials, make sure you pass through the
appropriate costs to your customer. The invoice icon is not crossed out in the billable
column (the billable column is indicated by the invoice icon).
Note: If you have the stock/purchase order feature turned on, the detail area contains
Expenses and Items tabs. Click the Items tab if you're tracking specific items you're
paying for.
6. Important: For fixed-price jobs, you don't pass through the costs to your customer.
In the detail area of a Write Cheque, Enter Credit Card Charges or Enter Bills form,
tick the billable column (as indicated by the invoice icon). An X appears over the
invoice icon indicating that these costs cannot be passed along to the customer.

Handling employee costs

You can use QuickBooks payroll to track employee time on your consulting and service projects.
When your employees charge time to jobs on a weekly timesheet, be sure to record time spent as
a payroll item. Then when you run the payroll and pay the employee for the hours charged, the
time spent at the employee’s rate will be automatically charged to the job as a cost.

Handling subcontractor costs

Your subcontractors are just like any other vendor supplying you services, in this instance time
and possibly materials as well. You should use the Enter Bills procedure to enter the document
from your subcontractor claiming payment – be it an invoice or timesheet – as a ordinary bill.
Make sure when you enter the bill that you enter a customer:job to charge it to. If your
subcontractor has worked on several jobs, you can split out the charge by entering several lines.

Handling reimbursable expenses

Consultants often incur expenses on behalf of clients while working on projects. These expenses
-- items such as carriage fees and travel expenses -- are called reimbursable expenses.

Tracking your own costs for reimbursement

Notes prepared by Ochieng Tom

When you incur expenses that you plan to pass along to clients, you pay for the expense by
cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and
pass them along to your clients when it's time to bill them.
If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate
the appropriate expense account and Customer:Job for this expense. Enter any necessary memo
information.
If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses,
select the appropriate expense account and Customer:Job for this expense. Enter a memo in the
detail area of the cheque to describe what the expense was for. This description appears in the
Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the Create Invoices form displayed, click
the Time/Costs button and select the Expenses tab. QuickBooks displays a list of expenses not
yet invoiced for that customer. If you want to include the expense on the invoice, click in the Use
column next to the reimbursable expense and click OK.

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those
employees, then pass on the costs to the client. Here's how to handle this situation in
QuickBooks.

To reimburse employees and bill clients:

1. Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.
2. From the Activities menu, choose Write Cheques window.
 Write a reimbursement cheque (not a pay cheque) to each employee.
 In the cheque detail area, itemise each expense by client and project (Customer:Job).
 Click OK to record the cheque.
3. From the Activities menu, choose Create Invoices.
 Write an invoice to the client.
 Click the Time/Costs button and select the Expenses tab to choose the reimbursable
expenses you want to include on the invoice.

You'll see the expenses incurred for the client you are invoicing, with the name of the employee
who incurred that expense in the payee field.

 Click in the Use column next to the expenses you want included on the invoice. If you
mark up expenses, enter the mark up at this point. Then click OK.
 Click OK when you have completed the invoice.

Assigning expenses to a customer or job

When you plan to charge your customer for the expenses you incur on a job, here's what you
must do to track the expenses.

1 Set up QuickBooks to track expenses by customer:job.

2 Use a bill, cheque, or credit card charge to record the expenses. On the Expenses tab,
enter each expense. In the Customer:Job column, be sure to assign each expense to the
customer (or if you're tracking by job, to the job you are doing for the customer).

Notes prepared by Ochieng Tom

QuickBooks 6.0
Practise Exercises.

Chapter 3 Creditors Transactions

1. Create the following suppliers supplier’s records with addresses of your choice.
a. Telkom Kenya Ltd.
b. Kenya Power
c. Office Mart
d. Text Book Centre
e. Seal Honey
f. Uchumi supermarkets

2. Record the following suppliers invoices: (Using the Enter Bills Option)
a. On the 15th of January from Telkom, Kenya for KShs. 12000 inclusive of 18% VAT,
for telephone expenses,
b. On the 18th of January from Kenya Power, for Kshs. 6000 for electricity.
c. On the 1st of February from Uchumi supermarkets for KShs. 15000 for materials
purchased.
d. On the 5th of February from Bata Shoe company for Kshs. 21240/= for the supply of
30 pairs of Safari Boots as part of stock.
e. On the 8th of February from the Office Mart for KShs. 12000 plus 18% Vat for the
supply of office stationery.
f. On the 5th of January from Nairobi City Council for KShs. 2000 for water.
3. Record the following credit notes.
a. On the 12th of February from the Office Mart for KShs. 1000/= inclusive of VAT for
goods returned on the stationery account.
b. On the 13th of February from Bata Shoe company for 1416/= inclusive of 18% Vat for
two pairs of boots that were spoilt.
c. On the 20th Of February from The office mart for 500/= plus 18% VAT because of an
overcharge on the original invoice sent.

4. Paying bills:
Full payment
Pay Telkom and Kenya Power the full amount you owe them.
Part payment
Pay the Office Mart, Seal Honey and Text Book Centre half of what you owe them.
Payment with discount
Pay Uchumi all you owe less a 1000/= discount given to you. For the 1000 record a credit
note.

Notes prepared by Ochieng Tom

 Customers Transactions

In this section you will learn about the following

activities:
 Customer Accounts
 Raising Invoices
 Recording Cash Sales
 Receiving Payments Against Invoices
 Issuing Credit Notes and Refunds
 Depositing Payments
 Customer Related Reports

Customer Accounts

How customer registers work

QuickBooks provides a register for each customer on your Customer:Job list. The register lists all
the accounts receivable
(A/R) transactions related to that customer. These can include:

 Invoices (if you bill through invoices)

 Payments received from the customer
 Credit memos and refund cheques
 Finance charges.
Customer registers do not show cash sale receipts. (Because the customer pays in full, a cash
sale is not an accounts receivable transaction.) They allow you to View a customer's accounts
receivable

To display a customer's register

 From the Lists menu, choose Customers:Jobs, select the customer whose register you
want to see. Then choose Use Register from the Activities menu button.
 Or, on the Sales and Customers tab of the Navigator, click Customer Register. Then,
from the Customer:Job drop-down menu, select the customer whose register you want to
see.

Adding a customer

If you're new to QuickBooks

1 Display the Customer:Job list.

2 Choose New from the Customer:Job menu button.
3 In the Customer field, enter the name of the customer as you'd like it to appear on your
Customer:Job list.
For example, if the customer is Hayley Green and you want the list to show last names
first, you would enter Green, Hayley.
4 Complete the Address Info tab and Additional Info tab. You can enter opening balance
information on the Additional Info tab.
5 Record the customer.

Notes prepared by Ochieng Tom

 What if a customer is also a vendor?

In this case, you need to add the person's name to both your customer and vendor lists, but you
need to vary the name slightly on one of the lists. You may want to do something like adding a
"_v" to the person's name on the vendor list.
When you vary the name in the New Vendor or New Customer window, enter the person's real
name in the "Bill to" field or the "Print on Cheque as" field, respectively, so that the correct name
prints on invoices or cheques.
About invoices and reminder statements

Raising Invoices

About invoices

An invoice lists what you sold to a customer and shows the quantity and cost of each item. Use
invoices if:

You sell goods or services and need to keep a detailed record of each sale.
You use discounts, or any other item that is calculated as a percentage of charges.
You use group items or payment items.

Each invoice stores information that you can draw from later when you analyse your business.
For example, if you want to know the sales income for each item you sold, you can create a
report (Sales by Item Summary) that provides those numbers. The line item detail on your
invoices makes this possible.

Reminder statements work with invoices

When you use invoices to bill your customers, you can also send reminder statements to notify
your customers about delinquent payments. A reminder statement summarises what you've billed
previously through invoices by listing the invoices you've sent, credits you've given, and any
payments you've received. You don't have to enter more data to create a reminder statement—
QuickBooks already knows what needs to appear on the statement.

Creating an invoice

1 Display the Create Invoices window.

2 Fill in the name of the customer or job.
3 Select a template.
4 Enter the line items.
5 Apply VAT (if applicable).
6 Enter the class information if you want to track this sale by location, subsidiary, group,
etc.
7 If you wish, enter a message for your customer in the Customer Message field.
8 (Optional) Enter a memo for this sale.

The memo is a reminder to you, it does not appear on the printed form. It appears onscreen, on
sales reports, and if you send reminder statements, it will print on reminder statements that
include this invoice.

9 Click Print to print the invoice now, or select the To be printed checkbox to print the form
later.
10 Record the invoice.

Notes prepared by Ochieng Tom

Reimbursable Expenses.

Invoicing and Passing Along an Expense to a Customer.

Expenses that your business incurs on behalf of customers. You can charge a customer for
reimbursable expenses by assigning the expense to the customer when you incur it and then
transferring the expense to an invoice.

If you have purchased something for a customer for which you will be reimbursed, you need to
indicate this on the Write Cheques window.

1 Display the Write Cheques window.

2 Complete the top portion of the form.
3 Enter the Expenses and/or Item information.
4 For each expense or item, enter the appropriate customer in the Customer:Job column.
5 To indicate that this expense should be passed along to the customer, leave the Billable
column (the column headed by the small invoice icon) blank (without an “X” through it).
6 Click OK.

This will allow the expense to be passed along when you invoice the customer.

How do expenses become reimbursable?

1 On the invoice or cash sales form enter the name of the customer and job you incurred
the expenses for.
2 Click Expenses.
3 In the Choose Reimbursable Expenses window, click in the Use column next to each
expense you want to include on the invoice or cash sales receipt.
4 (Optional) If you want the expenses you select to appear as a single line item when you
print the invoice or cash sales receipt, select the "Print selected expenses as one invoice
item" checkbox.

Important. Do this only if you are certain you want the printed invoice to show only the total of the
costs (and not a line by line listing of each cost). Once you record the invoice or cash sale, you
will not be able to print the costs separately.

5 (Optional) If the reimbursable expenses are taxable, select the "Selected expenses are
taxable" checkbox.
6 (Optional) Add a markup to the expenses you selected:
Enter the amount or percentage of the markup in the "Markup Amount or %" field. If the
markup is a percentage, include the % sign.
In the Markup Account field, enter the name of the account you use to track markup
income.
7 Click OK to add the expenses you selected to the invoice or cash sales receipt.

Entering a cash sale

Use this procedure when you make a sale for which you receive full payment at the time of the
sale. Cash sales can include payments by cash, cheque, or credit card.

1 Display the Enter Cash Sales window.

2 If the Customer:Job field is blank, enter the name of the customer:job.

If you don't need to track sales by individual customer or job, use a sales summary to record your
cash sales instead.

Notes prepared by Ochieng Tom

3 Select a template.
4 (Optional) Assign a class to the sale.
5 Fill in the top part of the sales form.
6 Fill in the line item area.
7 If you wish, enter a message for your customer in the Customer Message field.
8 (Optional) Change the VAT code shown in the VAT column.

9 (Optional) Enter a memo for this sale.

The memo is a reminder to you, it does not appear on the printed form. It appears onscreen and
on sales reports that include this sale.

10 Select the "To be printed" checkbox if you plan to print the form later, or click Print to print
it now. To see what the printed version of the form will look like, click Preview.

Note: Printing the sales receipt does not record the sale in QuickBooks.

11 Record the sale.

Sending summary statements to customers

As you enter invoices and customer payments day to day, QuickBooks tracks the information to
create summary statements that you can send to your customers. Summary statements are like a
mini-report of the charges and payments made on a customer's account; you just review them,
decide whether to add finance charges, and print them.

Issuing Credit Notes and Refunds

Entering a credit memo or recording a return

Use the Credit Memo/Refunds window to record a return when a customer returns items for
which you have already recorded an invoice or cash sale. If you need to issue a credit card
refund for the returned items, click the link "Recording a return and credit card refund" at the end
of this topic.

1 Display the Create Credit Memos/Refunds window.

2 In the Customer:Job field, choose the customer or job the return is for.
3 Select a template.
4 Choose which accounts receivable account to use.

This field appears only when you have more than one accounts receivable account (most
companies have only one).

5 Enter the items being returned in the line item area. Use the same information that was
on the original invoice. QuickBooks decreases the income accounts of the invoice items
by the amount of the return.
6 (Optional) Assign a class to this credit memo.
7 (Optional) In the Customer Message field, choose a message from the drop-down list or
enter a new message to your customer.
8 (Optional) Enter a memo for this transaction.

The memo does not print on the credit memo, but it does appear in the Accounts Receivable
register and the customer register.

Notes prepared by Ochieng Tom

9 Click Print to print the form now, or select the "To be printed" checkbox to add the credit
memo to a list of forms to print in a batch later.
10 Record the credit memo.

QuickBooks enters a negative amount in your A/R register for the credit memo.

11 If you now owe the customer money, write a refund cheque.

Writing a refund cheque for customer returns

When you record a return from a customer, click the Refund button in the Create Credit
Memos/Refunds window to write a refund cheque.

1 If you haven't already done so, enter a credit memo/refund for the return.

Enter the credit memo before writing the refund cheque in order to record the transactions
correctly in QuickBooks.

2 Display the credit memo for the amount you'd like to refund.
3 Click Refund to create the refund cheque.
4 Make sure all the information on the cheque is correct.

Caution. Leave Accounts Receivable as the account in the detail area of the refund cheque. This
ensures that QuickBooks will account for the credit and refund correctly.

4 (Optional) Select the "To be printed" checkbox to print this cheque later, or click Print to
print the cheque now.
5 Click OK.

Important: Although you have recorded both the credit memo and the cheque, you still need to
connect the cheque to the credit memo so that QuickBooks can track the transaction correctly.

6 From the Activities menu, choose Receive Payments.

7 From the Customer:Job drop-down list, choose the customer to whom you just wrote the
refund cheque.
8 On the Refund Chq. line, enter the cheque amount in the Payment column. Then press
Tab.
9 Click OK.

Writing a refund cheque to a customer who overpaid

1 Display the Credit Memos/Refunds window.

2 Enter the customer:job name.
3 Click Refund to create the refund cheque.
4 Enter the appropriate information on the cheque.

Caution: Leave Accounts Receivable as the account in the detail area of the refund cheque. This
ensures that QuickBooks will account for the refund correctly.

5 (Optional) Select the "To be printed" checkbox to print this cheque later, or click Print to
print the cheque now.
6 Click OK.

Notes prepared by Ochieng Tom

Important: Although you have recorded both the overpayment and the refund cheque, you still
need to apply the cheque to the overpayment.

7 Click cancel to close the Create Credit Memos/Refunds window. Do not record the credit
memo for the customer.
8 Display the Receive Payments window.
9 In the Customer:Job drop-down list, choose the customer to whom you just wrote the
refund cheque.
10 Select the "Apply Existing Credits" checkbox.
On the Refund Chq line, QuickBooks automatically enters the cheque amount in the
Payment column.
11 Click OK.

Writing a refund cheque for customer returns

When you record a return from a customer, click the Refund button in the Create Credit
Memos/Refunds window to write a refund cheque.

1 If you haven't already done so, enter a credit memo/refund for the return.

Enter the credit memo before writing the refund cheque in order to record the transactions
correctly in QuickBooks.

2 Display the credit memo for the amount you'd like to refund.
3 Click Refund to create the refund cheque.
4 Make sure all the information on the cheque is correct.

Caution. Leave Accounts Receivable as the account in the detail area of the refund cheque. This
ensures that QuickBooks will account for the credit and refund correctly.

4 (Optional) Select the "To be printed" checkbox to print this cheque later, or click Print to
print the cheque now.
5 Click OK.

Important: Although you have recorded both the credit memo and the cheque, you still need to
connect the cheque to the credit memo so that QuickBooks can track the transaction correctly.

6 From the Activities menu, choose Receive Payments.

7 From the Customer:Job drop-down list, choose the customer to whom you just wrote the
refund cheque.
8 On the Refund Chq. line, enter the cheque amount in the Payment column. Then press
Tab.
9 Click OK.

Handling returns on unpaid invoices

If you have a customer who is returning items from an unpaid invoice, void the invoice. Voiding
the invoice, instead of deleting it, lets you keep complete records of all sales.
If the customer is returning items but there are items remaining on the invoice, do not void the
invoice. Instead, create a credit memo to record the returned items.
 Voiding an invoice
 Entering a credit memo

Notes prepared by Ochieng Tom

Applying credit amounts to invoices

1 Choose Receive Payments from the Activities menu.

2 Choose a customer's name.

The amount of the credit memo appears in the Existing Credits field.

3 Select the "Apply Existing Credits?" checkbox to apply the credit amount to any invoice
for this customer.

QuickBooks enters the credit amount in the payment field of the oldest outstanding
invoice if you have set QuickBooks to automatically apply payments. If you did not set
QuickBooks to automatically apply payments, click in the tick column next to the invoice
being credited.

4 Click OK.

Receiving and Depositing Payments

Receiving payments in QuickBooks

As you start to record a payment, you immediately see the customer's current balance, including
any credits, and a complete list of outstanding invoices. You can assign the payment to any of the
invoices.
You can indicate which payments to group in a deposit the same way your bank groups them on
its statements, according to type (cheque, cash, or credit card), and print a deposit summary you
can use to help you complete your bank deposit slip.
You can record a cash sale, create a credit memo, or create a refund cheque.

Where in QuickBooks you record a payment received depends on the type of payment. Use the
following list to help you decide which type of payment you're receiving and which window in
QuickBooks you should enter it.

 Use the Receive Payments window to record a payment against an invoice (in full or
partial).
 Use the Enter Cash Sales window to enter full payment at the time of sale.
 Use the Create Invoices (use a Payment item) window to record a partial payment at or
before the time of sale.
 Use the Receive Payments and Create Credit Memos/Refunds windows to record a
down payment or prepayment.

Handling barter payments

Handling barter income requires the following setup before entering barter transactions:

 Create a barter bank account

 Create a barter payment item

Notes prepared by Ochieng Tom

 To enter a barter transaction
1 Create the invoice as normal entering the items that represent the services or products
this customer received.
2 On the next blank line of the invoice, enter your barter payment item.

In the Description area, you can add information about the barter arrangements.

The amount of the invoice should equal the fair market value of the trade.

3 Click OK.

Receiving credit card payments

You can enter credit card payments from customers the same way you enter payment by cash or
cheque. The procedures below are for payments on invoices.

1 In the Receive Payments window, use the Pmt. Method drop-down list and select the
name of the credit card your customer is using.

If their card is not on the list, click Add New and add that credit card name to the Payment
Methods list.

2 When you return to the Receive Payments window, the name of the credit card will
appear in the Pmt. Method drop down list.

Correcting the application of a payment

If you apply a payment to the wrong invoice, you can correct the error by editing the payment
transaction.

1 From the Lists menu, choose Chart of Accounts.

2 Select your accounts receivable account.
3 From the Activities menu button, choose Use Register.
4 Select the payment transaction you want to change.
5 Click Edit.
6 Correct the error in the Receive Payments window.
7 Click OK.

Recording payment on a customer's loan

The total of the principal and interest entries must equal the total of the payment amount.

1 From the Activities menu, choose Make Deposits.

2 In the Received From column, enter the name of the purchaser.
3 In the Amount column, enter the amount received towards the principal.
4 In the From Account field, enter the asset account for this loan.
5 In the Received From column, enter the name of the purchaser.
6 In the Amount column, enter the part of the payment that goes to interest.
7 In the From Account field, enter the other income account used to track interest income.
8 Click OK.

Notes prepared by Ochieng Tom

Depositing payments

When you receive payments, whether for invoices, or cash sales, you can either show them as
deposited into a bank account, or you can wait until the end of the day or end of the week to
deposit the money you've collected. QuickBooks allows you to choose the method you prefer for
depositing payments.
When you are deciding on the method to use to deposit payments, think about how your bank
statements show deposits. You should select the deposit method in QuickBooks that imitates
your bank statements to make it easier for you to reconcile your bank accounts.

For example, if the bank statement shows a lump sum for a deposit, you should choose to group
payments with other funds for later deposit; if the bank statement shows each individual cheque
that was deposited, you should choose to deposit directly to an account.
You should choose a deposit method in the Receive Payments window, the Enter Cash Sales
window, or the New/Edit Item window for a payment item.
If you choose Deposit To and select a bank account from the drop-down list, QuickBooks
automatically records a deposit for the amount of the payment in the account you selected on the
date you received the payment.

If you choose Group with other undeposited funds, QuickBooks holds your undeposited funds in
an other current asset account called Undeposited Funds until you record a deposit.

1 From the Activities menu, choose Make Deposits.

2 If you have payments to deposit, click the ones you'd like to deposit now.
3 Click OK.

Note: To return to the list of payments to deposit, click the Pmts. button.
4 In the Make Deposits window, select the account you'd like to deposit into.
5 Indicate whether you are getting cash back.

If you spent some of your cash sales receipts during the day, follow the steps for getting cash
back to enter the expenditures in QuickBooks.

6 (Optional) If you are depositing a payment made by credit card, you can enter the credit
card fees as a negative amount and charge them to an expense account by listing the
fees on a separate line in the Make Deposits window.
7 In the detail area of the Make Deposits window, enter any deposits that did not come
from customer payments.
8 Click OK.

Assessing finance charges

When you assess finance charges, QuickBooks creates an invoice for each charge.

1 Set up QuickBooks to assess finance charges.

2 From the Activities menu, choose Assess Finance Charges.
3 Select the customers and jobs for which you want to assess finance charges.

Important. Customers and jobs marked with an asterisk (*) have credits in the form of payments
or credit memos that you have not yet applied to any invoice. The overdue balance shown in the
Assess Finance Charges window does not reflect these credits.

4 (Optional) Change any finance charge amounts by typing over the amounts shown in the
Fin. Charge column.

Notes prepared by Ochieng Tom

To change the interest rate, click Settings and enter the new rate.

5 (Optional) If you plan to print the finance charge invoices to send to customers, select the
"Mark invoices To be printed" checkbox. If you send statements, leave this checkbox
cleared. The finance charges will be included the next time you print statements.
6 Click OK.

Customer Related Reports

Customers Statements
You cannot print the balance due directly on an invoice, but you can send reminder statements to
customers. Reminder statements show how much customers owe on each invoice and how long
each amount has been outstanding. You can also assess finance charges on outstanding
balances. As you enter invoices, customer payments, and credit memos day to day, QuickBooks
tracks the information necessary to create reminder statements.

1 Make sure your printer is turned on and is online.

2 Make sure that the correct paper is in the printer.

If you are printing onto statement forms, position the forms the same way you position invoice
forms.

3 From the Activities menu, choose Create Statements.

4 If QuickBooks gives you a choice of accounts, choose the A/R account for the statements
you want to print.

Note: QuickBooks displays the A/R Account field only when your chart of accounts contains more
than one accounts receivable account. Most companies have only one A/R account.

5 From the Print Format drop-down list, choose the template you want to use to print the
statements.

Tip. If you want to

prints a consolidated statement for each customer.

10 If you don't want QuickBooks to print statements that have a zero balance, select the
"Don't print statements with a zero balance" checkbox.
11 Click Preview if you want to review the information that will appear on the statements.

Note: Any information you entered in the Memo field on invoices prints on the reminder
statements created for the customer:job.

12 (Optional) Click Finance Charges to add finance charges to the statements. These will
appear on the statement as an INV FC (Finance Charge Invoice). A finance charge
invoice will be created in your invoice list which you can print if you want to.
13 Click OK.

Notes prepared by Ochieng Tom

14 In the Print window, check the assumptions QuickBooks has made about your printing
job.
Make any changes needed.
15 Click Print.

Reports about customers and jobs

QuickBooks provides many reports that break information down by customer and job:
Which customers and jobs are profitable?
 Profit and loss by job
 Income by customer summary
 Income by customer detail
 Who owes us money?
 A/R ageing summary
 A/R ageing detail
 Open invoices
 Collections report
 Customer balance summary

 Customer balance detail

 Customer open balance report
 Whom are we selling to?
 Sales by customer summary
 Sales by customer detail
 How well do we budget for jobs?
 Budget by job overview
 Budget by job comparison
 Helpful information about customers
 Transactions by customer report
 Customer phone list
 Customer contact list
 Customer QuickReport

QuickBooks 6.0
Practise Exercises.

Chapter 4 Customers Transactions

1. Create the following customers records.
a. Multichoice Kenya, P O Box 66258. Nairobi.
b. Starlight Insurance Agency, P O Box 2300. Nairobi.
2. Create the following customers and post in their opening balances as well.
a. Alico Kenya Ltd. With an opening account balance of 50,000/=.
b. Great Wall Technologies, with an opening balance of 150,000/=.
c. Perfect Colours with an opening balance of 15,000/=.
3. Through the invoicing window record the following invoices.
a. On the 10th of January issue a service invoice to Multichoice Kenya for a feasibility
study you have done on their behalf which will cost the KShs. 50,000/= plus 18%
VAT.
b. On the 11th of January issue another service invoice to Magadi Soad Company,
charging them for product development consultancy fees as agreed at the rate of
KShs. 100,000/= plus 18% VAT.

Notes prepared by Ochieng Tom

4. On the 13th of January issue a service credit note to Magadi Soda Company for Kshs. 5000/=
plus VAT being a discount given on the agreed on consultancy fee.
5. Product Invoicing:
a. Issue a product invoice to Research International on the 15th of January in which you
sell them 15 Diaries at 500/= each plus !8% VAT.
b. On the 17th of January Research International return 2 diaries as spoilt. Issue a
product credit note for this.
6. Record the following invoices through the create invoices option. Create and fill in transaction
details of your own:
a. On the 5th of January, record that you have invoiced Alico Kenya 15,000/= plus 18%
VAT.
b. On the 7th of January record that you have invoiced Ukweli Videos 18,000/= inclusive
of 18% VAT.
c. Also record that you have issued a credit note to Alico Kenya for Kshs. 3000/= plus
18% VAT for correcting an overcharge on a previously issued invoice.
7. Record the following cash sales:
a. On the 14th of January you Sold to Ukweli Video 12 Diaries which they paid for in
cash and you deposited this money into the Barclays Bank Current Account.
b. On the 16th of January you did a business plan for Magadi Soda which they paid for
10,000/= plus 18% VAT. Record this as a cash sale.
8. Record that you have received money from your customers as follows:
i. Great Wall on the 1st of February gave you full payment.
ii. Perfect Colours on the 5th of February gave you full payment
iii. On the 5th of February Alico paid 32,000/= and you gave them a discount of
2000 from the balance they owe by issuing a refund to them. ( Record the
recipt and then use the Credit and Refund option to record the discount.)
iv. On the 7th of February Ukweli Video pay 15,000/=.
v. On the 10th of February Multichoice pay 57,000 and you give them a discount
of 2000/=.
vi. On the 9th of February Research International pay you 4,700/=.

Notes prepared by Ochieng Tom

 Bank and Cash Transactions
In this section you will learn about bank and
cash related activities including the ones
listed below:
 Creating a Bank Account
 Writing Cheques
 Standing Orders
 Making Deposits
 Reconciling accounts
 Posting and Paying VAT.

Creating A Bank Account.

Follow the procedure provided for setting up new accounts as provide in the getting started
section of this book.

1. Open up the chart of accounts in Quckbooks.

2. Open the “Account” icon at the bottom of the of the Cart of Accounts window .
3. Select “New”
4. Select the account type: i.e. bank
5. Put in a name for the bank account.
6. Fill in all the other details as required and click O.K.

Writing a cheque
You can write a cheque for any kind of expense you track through expense accounts and for the
following types of items: non-stock part, service, and other charge. If you are using the
stock/purchase order feature, you can write cheques for stock part items too.
If you’ve entered bills into QuickBooks using the Enter Bills window or the Accounts Payable register,
you must use the Pay Bills window for your bill payment. To pay payroll liabilities, use the Pay
Liabilities/Taxes window. These Pay windows are linked to the information you filled in previously
regarding your bills, and payroll taxes and will fill in the cheques for you. If you do not use the correct
Pay windows, your liability in these areas will not decrease.

1 Display the Write Cheques window.

2 In the Bank Account field, choose your current account or <Add New> to create it.
3 In the "Pay to the Order of" field, choose from the drop-down list or enter a new name.

If a purchase order exists for this vendor

4 Enter the amount of the cheque in the £ field. If you leave this field blank, the amounts
you enter in the detail area of the cheque will total automatically and display here.
5 Complete the Address and Memo fields as needed.
6 On the Items tab you can edit items that displayed from your purchase order and/or enter
new items.
7 To enter shipping charges, and other expenses not associated with any one item, click
the Expenses tab. In the detail area, enter each charge and associate it with its correct expense
account.

8 Record the cheque.

Paying Bills
After you enter a bill, you should pay it from the Pay Bills window rather than just by writing a
cheque. This video shows how the Pay Bills window saves you time.

From the Pay Bills window, you can pay with:

A cheque
A credit card payment
Cash

Paying a bill with a cheque

How does the Pay Bills window work?

1 Display the Pay Bills window.

2 Under Pay By, choose Cheque. If you plan to print this cheque from QuickBooks (instead
of handwriting it), select the "To be printed" checkbox.
Then enter the name of the current account from which you will pay the bills.
3 Fill in the optional fields in the Pay Bills window.
4 Select the bills you want to pay.

If you don't see all the bills you expect

5 Record the payment.

What happens when you record a bill payment?
6 To print your cheques, open the File menu, choose Print Forms, and then choose Print
Cheques.
Or, to write cheques by hand, record the correct cheque numbers in the cheque register.

Recording an invoice payment

When you receive payment on an invoice you've sent to a customer, you use the Receive
Payments window to apply the payment to the invoice. When the customer pays in full at the time
of the sale, enter a sales receipt instead. When you receive a partial payment at the time you
write an invoice (or before), enter a payment item on the invoice.

1 Display the Receive Payments window.

2 Complete the fields in the top half of the window. If the payment is for a particular job on
your Customer:Job list, make sure you choose the job as well as the customer's name in the
Customer:Job field.

If you received one payment that covers multiple jobs, you'll need to apply the appropriate
amount of payment to each job separately.

3 If this is the first time you are entering a customer payment, indicate whether you want
QuickBooks to group this payment with other undeposited funds, or deposit it directly into a bank
account.

4 (Optional) Redistribute the payment

For more information, see this example of how QuickBooks applies payments.
5 Record the payment.

Depositing payments
1 From the Activities menu, choose Make Deposits.
2 If you have payments to deposit, click the ones you'd like to deposit now.
3 Click OK.

Notes prepared by Ochieng Tom

Note: To return to the list of payments to deposit, click the Pmts. button.

4 In the Make Deposits window, select the account you'd like to deposit into.
5 Indicate whether you are getting cash back.

If you spent some of your cash sales receipts during the day, follow the steps for getting cash
back to enter the expenditures in QuickBooks.

6 (Optional) If you are depositing a payment made by credit card, you can enter the credit
card fees as a negative amount and charge them to an expense account by listing the fees on a
separate line in the Make Deposits window.
7 In the detail area of the Make Deposits window, enter any deposits that did not come
from customer payments.
8 Click OK.

Editing or deleting a deposited payment

If you need to edit or delete a payment you've already included in a deposit in the Make Deposits
window, you must remove the payment from the deposit before you can edit or delete it.

Note: If you have set up QuickBooks to bypass Undeposited Funds and to deposit payments
directly into an account, you cannot edit or delete a payment without affecting your records. When
you delete a payment from the account register, the payment no longer exists in QuickBooks.
You will need to enter the correct deposit.

1 Open the Undeposited Funds register.

From Lists menu, choose Chart of Accounts. Then, from the Activities menu button, choose Use
Register.

2 In the register, select the deposit that contains the payment you want to edit or delete.
3 Click Edit.
4 In the Make Deposits window, select the line containing the payment you want to edit or
delete.
5 From the Edit menu, choose Delete Line.

QuickBooks deletes the payment from the deposit. The payment still exists in your QuickBooks
records; it's just undeposited. QuickBooks puts the money back into Undeposited Funds.

6 Click OK in the Make Deposits window to record the deposit without the payment you've
just deleted.
7 Edit or delete the original payment transaction.
8 After editing a payment, you can redeposit it using the Make Deposits window.

Using the QuickMath calculator to calculate amounts

1 Click in the field where you want to make the calculation.

You can do calculations in any numeric field, such as pound amounts in registers and quantities
in transactions. You can’t calculate time entries, cheque numbers, or dates.

2 Display the calculator:

Press the = key.

or

Notes prepared by Ochieng Tom

 Type a number followed by +, - , * , / , or =.

3 On the paper tape that appears, type as many numbers and operators (+, -, *, /, or =) as
you need to complete the calculation. You can enter numbers as large as 9,999,999.99.

To: Press:
Get a subtotal =
Clear an entry C
Clear the tape C (twice)
Repeat the last
calculation The operator key as many times as needed. For example, to add 100 three
times, you would enter:100 + + +
Enter a negative
Number The key for the operation you want to perform, press -, and enter the number. For
example, to multiply 100 by minus 6.25, you would enter:100 * - 6.25
Cancel the
calculation Esc
4 To enter the calculation result in the field, press Enter or Tab, or click anywhere outside
the boundary of the tape.

Paying VAT

1 From the Activities menu, choose Pay VAT Liability.

2 If you have more than one current account, choose the current account from which you
want to pay the VAT.

3 If necessary edit the date

4 The “Pay to the order of” field automatically selects HM Customs & Excise.
5 Enter the amount you wish to pay in the Net Amt column.
6 Click OK.

Standing Orders
Memorising a transaction

Why memorise?

If you have standing orders or transactions that occur often, you can save time by memorizing the
details of the transactions. Once you do this quickbooks will re-enter for you the transactions as
required.

RESTRICTIONS:
You cannot memorise:
Receipt and deposit of payments, bill payments, payroll cheques, time records, VAT
payments, and payroll adjustment.

Instructions

Notes prepared by Ochieng Tom

1 Enter the transaction as you'd like it memorised.

Tip. If the content of certain fields will change each time you recall the transaction, leave those
fields blank. For example, you might want to leave the amount field blank on your monthly utility
bill. That way, you can fill in the amount each time you recall the bill.

2 From the Edit menu, choose Memorise.

3 Enter a name that will help you recognise the transaction on the Memorised Transaction
list.
4 Choose how you want QuickBooks to treat the transaction.

What the choices mean

5 Click OK to memorise the transaction.

6 If all you are doing is entering the transaction information for future use, click Cancel to
close the transaction window.

Using a memorised transaction

1 Display the Memorised Transactions list.

2 Select the memorised transaction you want to use.
3 Click Enter Transaction.
4 Make any necessary changes or additions.
5 Click OK.

Rescheduling a memorised transaction

1 Display the Memorised Transactions list.

2 Select the memorised transaction whose schedule you want to change.
3 Choose Edit from the Memorised Transaction menu button.
4 Select a different scheduling option for the transaction.
5 Click OK.

Handling down payments and overpayments

If a customer sends you more money than he or she owes, there will be an amount left over at
the Receive Payments window after you have applied the payment to invoices. QuickBooks
keeps track of the credit amount so you can apply it the next time the customer owes you money.

1 Enter the payment in the Receive payments window.

Caution. If you're recording a down payment, and you are doing more than one job for the
customer, be sure to specify both the customer name and the job name in the Customer:Job field.
This ensures that QuickBooks will apply the down payment to invoices for the correct job.

2 For an overpayment, apply as much of the payment as you can to outstanding invoices.
3 Note the leftover amount in the Unapplied Amount field.

If the payment is a down payment and there is no invoice yet, the entire payment amount is
displayed in the Unapplied Amount field. QuickBooks holds the unapplied amount with this
customer's name so that when you do have an invoice for this customer, you can apply the down
payment amount.

4 (Optional) Click Print Cred Memo to give the customer a receipt for the down payment or
overpayment. Do not record the credit memo.

Notes prepared by Ochieng Tom

The credit memo is for your customer only. It does not become part of your financial records in
QuickBooks.

5 Click OK.

Making Prepayments

You will need to create a prepayments account. This will enable you to post any prepayment you
make into this account. You can create such an account in Quickbooks by following the
procedure for creating new accounts in the chart of accounts window. The account type should
be other current asset and the account name can be: prepayments, prepaid rent, etc.

The prepayment can then be apportioned to the relevant account it relates to as it accrues. If this
accrual is regular then a memorized transaction can be set up and used to post the same. For
example posting rent to the rent expense account from the prepaid rent account.

Reconciling Bank Accounts

Reconciling an account with your financial statement to make sure your QuickBooks records
agree with the current, savings, and credit card financial statements you regularly receive.

1 Display the Reconcile window.

2 In the Account to Reconcile field, enter or select the account you want to reconcile.
3 Compare the opening balance amount shown on your statement with the amount shown
in the Opening Balance field in the Reconcile window.

If the opening balances are different . . .

4 Find the ending balance on your statement and enter it in the Ending Balance field.
5 Complete the "Transactions to be added" section of the Reconcile window:

If the financial statement shows a charge or interest that you have not yet entered into
your QuickBooks records, enter those amounts into the appropriate fields.
In the Account field for charges enter the expense account you use to track charges. In
the Account field for interest, enter the income account you use to track interest income.

6 When you find a transaction in the Reconcile window that matches a transaction on the
statement, click the transaction to mark it as cleared.
7 For each transaction you mark, verify that its amount matches the amount listed on the
statement.
8 If some amounts don't match, or if you find transactions that contain other errors, correct
the transactions.
9 If you find a transaction on your statement that is not shown in the QuickBooks list of
uncleared transactions, enter the transaction now.

10 When you've finished marking the transactions, look at the difference amount in the
bottom right corner of the Reconcile window:

If the amount is 0.00. Click Done. You've reconciled the account with the statement. At
this point, you can have QuickBooks print a reconciliation report.
If the amount is not zero. Your account does not balance for the period of time covered
by the statement, and you need to correct the difference. See Correcting differences.

Notes prepared by Ochieng Tom

QuickBooks 6.0
Practise Exercises.

Chapter 5 Bank and Cash Transactions

1. Create a new bank account:
a. Field petty cash account
b. KCB Fixed Deposit Account with an opening balance of Kshs. 1,000,000/=.
c. CBA USD Account
2. Transfer Kshs. 20,000/= from the Barclays account to the Field Petty Cash account.
3. Transfer KShs. 250,000/= from the KCB Fixed Deposit Account

6. Pay the commissioner of Vat KShs. 5000/=.

7. Record the following general payments from the Barclays account:
 KShs. 15,000 on the 20th of January to Manu Contractors for repairs and
maintenance
 KShs. 8500 inclusive of 18% VAT to Rayat motors on the 12th of February for
motor vehicle repairs and service.
 Payment made on the 5th of February to Manpower Development consultants of
KShs. 35,000 for Staff Training.
 Payment made to Creative technologies Ltd. On the 25th of February for the
purchase of computers worth 200,000/= plus 18% VAT.
8. Record the following general receipts and deposit them into the Barclays
current account:
 On the 1st of March from Susan Kamau: 5000/= being staff loan repayment.
 On the 24th of February from United Nations: KShs. 150,000 being miscellaneous
income.
 On the 10th of March from Mr Njeru being a donation of KShs. 25,000/= into a bursary
fund you are setting up.

Notes prepared by Ochieng Tom

 Staff and Directors Transactions
In this section you will learn about the following:
 Payroll Transactions
 Statutory Deductions
 Loan and Staff Advances
 Directors Accounts

Payroll Handling

The best was to deal with this is through the use of a practice exercise. A sample payroll has been
provided for this:

Instructions.

Record the salaries Expense Do this by passing a journal entry to the salaries payable account
with the total amount of gross salaries that you owe to all your staff
and any directors who are also employees of the company. Debit
the salaries expense account and credit the Salaries payable
account.

To pay the salaries Through the payment option in the bank module, Pay each person
whose name appears on the payroll with the net amount that is due
to them after all the deductions have been made.

To pay statutory deductions Use the payment option in the bank module to pay for any statutory
deductions that are a part of your payroll.

Statutory deductions You may choose to have separate current liabilities accounts for
accounts each statutory deductions especially if you are planning
to pay them at a later date or for any other reason. If this is the
case then after recording the salaries expense account make
entries to post all the statutory deductions to their specific accounts
from the salaries expense account. For example if you have a
specific account for paymaster General (PAYE) and you want to
post the amount due to them in tax from the payroll, debit the
salaries payable account and credit the paymaster general account
with the amount of tax deducted that is due to them from your
company.

Staff Loans and Advances If you have deducted any loans that the employees owe you from
previous transactions, make journal entries to adjust the loan
account balance by debiting the salaries payable account and
crediting the respective loan account with the amount of the loan
deducted form the payroll.

Account balance When you have paid all your staff, deducted your loans
and statutory deductions and posted them accordingly the balance
in your salaries payable account should be zero.

Therefore the salaries payable account can be used to handle all the transactions that have to do
with salaries. These are,

Notes prepared by Ochieng Tom

  Recording the salaries expense
 Posting the net salaries payment
 Posting the statutory deductions payments or transferring the amounts owed in statutory
deductions to their individual accounts
 Posting deduction in any staff loans or advances issued.

Staff Loans and Advances.

Loans and advances issued to staff are treated as assets and will appear in the balance sheet.
They may appear in the balance sheet as:
Prepayments
Current assets if the are payable back in less than a year meaning the are short term loans or
advances.
Or as long term assets meaning the loan will be paid pack within a period that exceeds one year.

You will need to create a staff loan account depending on the nature of the loans issued in your
company. You may opt to have one control account and set up sub accounts for each individual
member of staff who has a loan with the company.

Notes prepared by Ochieng Tom

Equity
Equity is the net worth of a company. If you sold all your assets today, and if you paid off your
liabilities with the money received from the sale of your assets, the money you would have left
would be equity.
Equity comes from two sources:
 Money invested in your company
 Profits or losses from your business

Of course, an owner can also take money out of the company. Such withdrawals, called owner's
draws, reduce the company equity.

Recording capital investments

1 From the Activities menu, choose Make Deposits.
2 If QuickBooks displays the Payments to Deposit window, do one of the following:

Select the payments you want to deposit along with your investment cheque.
Click Cancel to deposit the investment cheque by itself.

3 In the Make Deposits window, choose the bank account into which you're depositing the
money.
4 In the detail area, enter the name of the person from whom you received the money from
and the amount of the investment.
5 In the "From account" drop-down list, choose the appropriate equity account.
6 Click OK.

Recording an owner's draw

1 From the Activities menu, choose Write Cheques.
2 Make the cheque out to yourself.
3 In the detail area of the cheque, assign the amount of the cheque to the equity account
you use to record owner's draws.
4 Click OK to record the cheque.

Equity accounts you can create

You can create additional equity accounts as you need them. You can use equity accounts to
track the following:
 Owner's equity
 Owner's draws
 Capital investment
 Capital stock

If you own your company, we recommend that you add at least one equity account to track your
personal investment and owner's draws.

Equity accounts that you start with

When you set up your QuickBooks company, QuickBooks automatically sets up these two equity
accounts for you:
Opening Bal Equity
QuickBooks automatically creates this account when you enter the starting balance of your first
balance sheet account. QuickBooks uses Open Bal Equity to ensure that you get a correct
balance sheet even before you've entered all your company's assets and liabilities. QuickBooks
records the opening balance of each account in Opening Bal Equity.You can transfer some, or all,
of the money in Opening Bal Equity to other equity accounts.
Retained Earnings
This account tracks your company's net income from previous financial years. QuickBooks
automatically transfers your profit (or loss) to Retained Earnings at the end of each financial year.

Notes prepared by Ochieng Tom

Tracking retained earnings
Retained earnings are profits from earlier accounting periods that have not been distributed to the
company's owners. At the end of your financial year, QuickBooks computes your profit (or loss)
into an equity account named Retained Earnings.

1 From the Reports menu, choose Balance Sheet.

2 Chose Standard. Your Retained Earnings Account appears in the Equity section of the
balance sheet.

Example
If your financial year is January to December and you create a standard balance sheet on
December 31st, QuickBooks shows your net income for the year on a line labelled "Net Income."
In this example, the net income for the year is £124,493.00:

Equity
Opening Bal Equity 15,000.00
Owner’s Draws -45,750.00
Owner’s Equity 75,000.00
Retained Earnings 0.00
Net Income 124,493.00
Total Equity 168,743.00
If you then create a standard balance sheet the next day on January 1st, the same net income
from the previous year now appears in your Retained Earnings account, and net income for the
new year has changed to 0.00:

Equity
Opening Bal Equity 15,000.00
Owner’s Draws -45,750.00
Owner’s Equity 75,000.00
Retained Earnings 124,493.00
Net Income 0.00
Total Equity 168,743.00

Transferring money out of Opening Bal Equity

1 Display the Chart of Accounts.

2 Select the Opening Bal Equity account.
3 Choose Use Register from the Activities menu button.
4 Enter a transfer transaction:

Enter the amount in the Decrease column of the register.

In the Account field, enter the name of the equity account where you are transferring the
money.

5 Click Record.

Notes prepared by Ochieng Tom

QuickBooks 6.0
Practise Exercises.

Chapter 6 Staff and Directors Transactions.

Staff Loans and Advances.

Record that you have issued the following staff loans from the bank current account:
 On the 15th of January to John Omondi KShs. 15,000/=
 On the 25th of January to Susan Kamau KShs. 12,500/=
 On the 15th of February to Zachary Mucai KShs. 30,000/=.

On the 25th of February Zachary paid back 15,000/= to the company. Record this and deposit this
money into the petty cash account.

Directors Transactions.
 On the 15th of January Director 1 gave a loan to the company of KShs. 250,000/=; this
money was deposited into the Barclays current account. Record this transaction.
 On The 5th of January Director number 2 bought some additional shares worth 15,000/=
from the company. He paid for this by cheque, which was deposited into the Barclays
current account. Record this transaction.
 On the 15th of February Director 1 bought a computer worth KShs. 60,000/= plus 18%
VAT on behalf of the company. It was agreed that the Director could be paid back for this
computer at a later date. Record this transaction into your accounts.
 On the 5th of March you paid an electricity bill of 12,000/= for Director 2. This is now
money he owes the company. Record this into the accounts.

Notes prepared by Ochieng Tom

 Total Total NET
Name Pay NSSF PAYE NHIF NCCSC LOANS Deductions PAY
Susan 15000 100 1500 300 100 2000 4000 11000
Kamau
John 12000 100 1200 300 100 1700 10300
Omondi
Zachary 18000 100 1800 300 100 5000 7300 10700
Mucai
Paul 30000 100 3000 300 100 3500 26500
Simon
Total Pay 75000 400 7500 1200 400 7000 16500 58500

Record the above payroll transactions according to the instructions given in this chapter on
payroll handling.

Notes prepared by Ochieng Tom

 General Entries and Periodic Transactions

In this section you will learn about the following

general activities:
 Journal Entries
 Corrections: Editing and Deleting
 Audit Trails
 Budgeting
 Depreciation
 Condensing Data

General Journal Entry

In traditional accounting, a record of a transaction in which the total amount in the Debit column
equals the total amount in the Credit column, and each amount is assigned to an account on the
chart of accounts. For day-to-day transaction entry, QuickBooks uses familiar forms (invoices,
bills, cheques).
QuickBooks has a General Journal Entry window that you can use for special transactions (such
as selling a depreciated asset) or for all transactions if you prefer the traditional system.

Also, when you enter a transaction directly into an asset, liability, or equity account register,
QuickBooks automatically labels the transaction "GENJRNL" in the register and "General
Journal" on reports that list transactions.

When to Make a Journal Entry

The General Journal Entry window is for accountants who know debits from credits and who
prefer to enter certain transactions in a general journal. If you are unfamiliar with how a general
journal works, you do not need to use this form.
Typically accountants make general journal entries when working with an accountant's review
copy.
If you are not an accountant, you might use it to transfer amounts from one income or expense
account to another, or from one class to another.

Making A Journal Entry.

1 From the Activities menu, choose Make Journal Entry.

2 You can change the date.
3 Fill in the entry number.
4 In the detail area, enter distribution lines.
5 To record the journal entry:

To record and then enter another, click Next.

To record and close the window, click OK.

Viewing General Journal Transactions

1 From the Reports menu, choose Transaction Detail Reports, and then By Date.
2 Click Filters in the report button bar.
3 In the Filter list, select Transaction Type.
4 In the Transaction Type list, select Journal.
5 Click OK.

Notes prepared by Ochieng Tom

6 In the report, double-click the general journal transaction you want to view.
7 (Balance sheet accounts only) In the register that opens, click Edit to view the transaction
in its general journal form.

When the transaction originates in a balance sheet account, QuickBooks opens the account
register and selects the transaction. If the transaction also has split detail, QuickBooks opens the
Splits window so you can see how the amount of the transaction was distributed to different
accounts, customers, jobs, or classes.

Creating Budgets

Because consultancies and service businesses can involve large amounts of money, you might
want to set up budgets for your firm as a whole or for a particular client project. By setting up a
budget, you can also get an understanding of the costs you have committed for the financial year.
You can set up budgets that show your projected income and expenses and your projected
account balances. You can then can compare your actual income and expenses or your actual
account balances against your plan by using budget reports.

Here are some guidelines on setting up budgets:

 To create a budget by job (instead of month by month), in the Set Up Budgets window,
enter the budget for the entire financial year in the field for the first month of the financial
year. Make sure to choose the job you are using to track the project. If you don't want a
breakdown by account, don't choose any account.
 Budgets that extend across two financial years need to have the date adjusted on the
report to cover two years, for example, from 1/1/96 to 1/1/98.

Depreciation

When you purchase an asset that will be used in your business for more than one year, you
typically spread its cost over the useful life of the asset. But because fixed assets wear out or
become obsolete, their value declines constantly from the day they are purchased. The amount of
this decline in value is called depreciation.
To determine the value of a fixed asset at any point in time, you subtract its accumulated
depreciation from its original cost.
Example

You bought a company car in January 1997 for £13,000.

By January 1999, the car has depreciated by 40% of its original value (£5,200).
The value of the car in January 1999 is:

Original cost 13,000

Accumulated depreciation - 5,200
Current value 7,800

What's the best way to track depreciation?

1 Create a fixed asset account for each asset (or group of assets) you want to depreciate.

How to set up the accounts

2 Add two subaccounts to each asset account you created. One subaccount tracks the cost
of the asset, the other tracks accumulated depreciation.

Notes prepared by Ochieng Tom

3 Finally, create an expense account to track depreciation expense. Give the account a
name like "Depreciation Expense."

Entering a depreciation transaction

Important. Determining the amount of depreciation to deduct, or capital cost allowance (CCA) can
be a complex process, and Inland Revenue
’s rules on the subject change often. Ask an accountant for help in figuring actual CCA amounts.

1 Display the Chart of Accounts.

2 Double-click the subaccount that tracks accumulated depreciation for the asset you're
depreciating.
3 Enter the transaction in the bottom of the register:

 Enter the depreciation amount as a decrease in the register.

 In the Account field, enter the expense account you set up to track depreciation.

4 Click Record.

Effect on your accounts

In the asset's fixed asset account, QuickBooks subtracts the depreciation amount from the
current value of the asset.

In the account that tracks depreciation, QuickBooks enters the depreciation amount as an
increase to your company's depreciation expense.

When you purchase an asset that will be used in your business for more than one year, you
typically spread its cost over the useful life of the asset. But because fixed assets wear out or
become obsolete, their value declines constantly from the day they are purchased. The amount of
this decline in value is called depreciation.
To determine the value of a fixed asset at any point in time, you subtract its accumulated
depreciation from its original cost.
2 On the sales form, insert the discount item immediately after the item you want to
discount.

If the discount is to apply to more than one item, first use a subtotal item to calculate the total of
the items. Then, enter the discount item beneath the subtotal.
Changing your prices

1 From the Lists menu, choose Items.

2 From the Activities menu button, choose Change Prices.
3 Enter the type of item for which you want to change prices.
4 Use one of these methods to enter the new prices:

Enter the new prices in the New Price column.

Click Calculate Prices and enter a markup that you want QuickBooks to use to calculate
the new prices.

How to apply a markup

5 Click OK.

Notes prepared by Ochieng Tom

 Editing a list entry

1 Display the list that contains the entry you want to edit.
2 Select the entry.
3 In the list, choose Edit from the leftmost menu button.

This menu button always shows the name of the list. For example, to edit an entry on your
Customer:Job list, choose Edit from the Customer:Job menu button.

4 Edit, as needed, the information shown for the entry.

5 Click OK.

Voiding or deleting a transaction

If you want complete records, void a transaction rather than delete it. Voiding changes the
amount of a transaction to zero but keeps a record of it in QuickBooks. Deleting removes the
transaction completely.
Important. Deleting a transaction is irreversible.

To void a transaction
1 Select the transaction you want to void.
2 From the Edit menu, choose Void [transaction].
3 Click Record.

To delete a transaction
1 Select the transaction you want to delete.
2 From the Edit menu, choose Delete [transaction].
3 Click OK to confirm the deletion.

Finding a transaction

1 From the Edit menu, choose Find.

2 From the list of filters, select what you are looking for.

For example, if you are looking for a specific type of transaction, such as a deposit, you would
select Transaction Type and then select Deposit.

3 Fill in the fields that appear.

How to fill in these fields

4 Click Find.
To display a transaction, select the transaction you want to see and click

 se Transaction Type from the Filter list and select Cheque from the drop-down list. Make
sure that you are not using other filters (Date, for example) that could restrict the search
to certain cheques and not others.

Notes prepared by Ochieng Tom

  Tip 2. For some types of transactions, it may not be obvious which filter to use. For
example, you can create five different types of "cheques" in QuickBooks: cheques, bill
payments, pay cheques, and payroll liability cheques. Each has its own filter.

 Tip 3. The Posting Status filter can affect search results. For example, setting this filter to
Non-Posting limits the search to estimates, purchases, and pending sales—that is, to
transactions that do not post amounts to a register.

Audit trail report

This report shows which transactions were modified or deleted while the audit trail preference
was ON. (To set this preference, choose Preferences from the File menu and click Accounting).
For each transaction, the report shows what the modifications were.

Initially, the report shows transactions that were entered or modified today. You can change the
period of time covered by the report by choosing a different date range from the Dates list.
To display any of the transactions listed, double-click the transaction.

To create this report. From the Reports menu, choose Other Reports. Then choose Audit Trail.

Keeping An Audit Trail

You can have QuickBooks keep a record of all the changes made to transactions. Such a record is
called an audit trail.

If you keep an audit trail, you may find that QuickBooks works a little more slowly, and your data
will take up more disk space. These changes occur because QuickBooks must keep a record of
every transaction change. (Normally, QuickBooks writes over a transaction when you change it.)

To start an audit trail

1 From the File menu, choose Preferences.

2 In the Preferences window, select Accounting from the scroll box.
3 Select the Company Preferences tab.
4 Select the Use Audit Trail checkbox.
5 Click OK.

To view the audit trail report

1 From the Reports menu, choose Other Reports.

2 Choose Audit Trail.

What the report shows

Transactions that say "Previous Transaction" have been modified. You can compare a "previous"
transaction against the "current" one to see what has changed. The report also shows the date
and time of each modification.

Stopping an audit trail

Stopping an audit trail stops the addition of audit trail data to your company file. However, all
previous audit trail data is retained.

Notes prepared by Ochieng Tom

1 From the File menu, choose Preferences.
2 In the Preferences window, select Accounting from the scroll box.
3 Select the Company Preferences tab.
4 Clear the Use audit trail checkbox.
5 Click OK.

Removing audit trail data

Audit trail information increases the size of your company data file. If you need to, you can
remove the audit trail information by selecting "All audit trail info" when you condense the size of
the file.

Condensing Data.

If your company file has grown too large, you can reduce its size by having QuickBooks
condense the transactions from a period of time that you designate. When you condense data,
QuickBooks deletes all the transactions you no longer need to keep your records current,
replacing them with new transactions that summarise, by month, the deleted transactions.

Important. Condensing data has a significant effect on your company file. We suggest you
review this topic first before you proceed.

Which transactions are affected?

When you condense data, you specify an ending date for the period of time you want to
condense. This has no effect on transactions dated after the ending date. For example, if your
ending date is 31/12/98, all transactions dated 1/1/99 and later remain unchanged in your
company file.

Of the transactions dated on or before the ending date, QuickBooks deletes and summarises only
those that have no effect on transactions dated after the ending date.

For example, if an invoice has been paid in full, QuickBooks deletes the details and includes the
amount in a summary transaction showing income accounts. Neither the customer name nor the
items sold are retained. However, if an invoice is unpaid, QuickBooks leaves the invoice in your
file so you can apply future payments to the invoice.

This table gives examples of the situations that cause QuickBooks to retain transactions dated on
or before the ending date:

Situation / Examples
A transaction has an open balance:
Unpaid or partially-paid invoices, undeposited customer payments, unpaid bills, unused credit
memos.

A transaction is linked to another transaction that has an open balance

An undeposited customer payment that you applied to an invoice. Even though the invoice is
paid, QuickBooks retains the invoice because it has a link to an open transaction (the
undeposited payment).

A transaction is not marked as cleared

Unreconciled transactions in a banking or credit card account.

Notes prepared by Ochieng Tom

A transaction is marked as "to be printed"
Any invoice, credit memo, sales receipt, or cheque that has a tick in its "To be printed" checkbox.

QuickBooks summarises what it deletes

QuickBooks creates summary transactions for the transactions it deletes from your file. With the
exception of transactions that affect the value of your stock, you can spot the summary
transactions by looking for GENJRNL in the Type field of your registers.
There is usually one GENJRNL transaction for each month in which QuickBooks deleted
transactions. The transaction amount is the total of the transactions that QuickBooks deleted for
the month. For a given month, the register may also show other transactions that QuickBooks did
not delete. These are transactions that could be affected by transactions you have yet to enter.

The effect on stock

QuickBooks does not condense any transactions that include stock items.

The effect on your reports

Condensing your company file will affect reports that include part or all of the period of time you
condensed. The main effects are:

Account balances
After you condense your data, you can still create reports that summarise financial
activity for the period of time you condensed. For example, if you condense last year's data, you
can still create profit and loss reports that compare last year's results to this year's. This is
because QuickBooks adds summary transactions to your company file to preserve account
balances.

Transaction detail
After you condense your data, you won't be able to create reports that show daily detail for the
period of time you condensed. This is because QuickBooks deleted the individual transactions
that would have provided the detail. In addition, you won't be able to create reports that show
balances for individual customers or vendors over that period of time. (As a precaution,
QuickBooks creates a backup file in case you need access to the deleted transactions later.)

VAT reports
QuickBooks does retain information about each of your taxable items and your VAT vendors so
that you can get accurate reports about your VAT liability. This is the case even if some of the
transactions occurred within the period of time that you condensed.

The effect on payroll

QuickBooks adds adjustment transactions to your payroll liability account. Each payroll item
receives one adjustment transaction for each month over the period of time you condensed.

Condensing data

1 From the Window menu, choose Close All.

Before you can condense your data, you must first close all windows that are currently open on
the QuickBooks desktop.

Notes prepared by Ochieng Tom

2 From the File menu, choose Utilities and then choose Condense Data.
3 Enter the ending date for the period of time you want QuickBooks to condense the
transactions.

Example

4 (Optional) After QuickBooks condenses the transactions, you may have list items that are
no longer in use. If there are any unused list items that you wish to delete, select the checkboxes
for those items.
5 Click OK.

A message appears stating that QuickBooks will make a backup file before it condenses the
transactions. The backup file ensures that you will still have a record of the details of any
transactions that QuickBooks deletes from your company file.

If you are backing up to a floppy disk, be sure that you have a blank, formatted disk in drive A or
drive B and that you’ve selected that drive. You can change the name and location of the backup
file (QuickBooks suggests the name of your company file with a QBB extension).

6 Click Save to create the backup and condense your file.

QuickBooks 6.0
Practise Exercises.
Chapter 7 Periodic Transactions
Depreciation.

1. Using Straight line depreciation at a rate of 15% depreciate furniture and fitting and office
equipment manually.

2. Using the fixed assets register and the month end procedure depreciate motor vehicle
and computer equipment. Use the straight line method and a rate of 20% for the motor
vehicles and 25% for the computers.

3. Accrue the audit fee for this year at KShs. 60,000/=.

4. Accrue secretarial fees for this year at KShs. 15,000 per quarter.

Notes prepared by Ochieng Tom