Question

1. What are the differences between ITEMS and ACCOUNTS?
2. What are the two primary Reports in QuickBooks (financial statements)?
3. What is the difference between accrual and cash basis?
4. What is the difference between Entering a Bill (and Bill Payment) and writing a check?
5. What is the Undeposited Funds Account?
6. What are the steps to take to accept a customer’s payment and record it in the bank?
7. What do you look for when “analyzing” financial reports?
8. What is a Sub-Account? And why would you use it?
9. What does the collapse and expand button do on standard reports?
10. What is the difference between Profit and Loss Report and the Balance Sheet Report?
11. How do you get QuickBooks financial reports to excel? And why would you do that?
12. When reconciling a bank account, where does the value of the “Beginning Balance” come from? Where does the “Ending Balance” come from?
13. What is the purpose of reconciling the bank account? What are you supposed to do with the transactions that did not reconcile?
14. What is the difference between Cost of Goods Sold and Operating Expenses?
15. How do you program QuickBooks to repeat a recurring transaction?

Answer 1

1)

Items: Products and services that you sell,these are used in transactions such as invoice and purchase orders.All the items must point to an accounts

Accounts:Categories in which financial transactions are organised into reports, such as profit & loss and Balance sheet.some accounts carry balances such as accounts receivable and accounts payable,some accounts report information over a period of time such as income and expenses

2)

profit & Loss A/c: Account through which net profit or loss of a company can be known

Balance Sheet: It is a financial statement of a companies assets and liabilities

3)

Accrual: It represents activities and financial transactions as they occur such as salaries, rent expenses that always exists every month which are recorded whether they are paid or not

In accrual basis we have

• accounts Payable
• Accounts Receivable
• Prepaid expense asset
• Customer deposit liability

In accrual basis we record even though not paid

Cash basis:Transactions are recorded only when expenses and income when actually paid or received

4)

Entering a bill is to incur an expense in present and payment is done in future eg in general is credit card expense is done in present and payment paid in later

Write check is to record the transaction which has no difference between the expense and date of payment eg debit card payment and expense occured in same time

5)

Undeposited Funds Account uses when payment is received but not deposited in bank

6)

we have two steps:

Click on receive payments and select client and invoice to apply payment to ,this will increase your undeposited funds account.then click on Record deposit after it is taken to the bank and record all payments that are being deposited together in a single transaction to match the bank

7)

Consistency

matching the business expenses every month repeated items....consistency means following the same methods through out the accounting

trends

such as sales going up or expenses going down and also percentage of direct sales etc

8)

A sub account is a account that belongs to a main account which is used to create additional categories with in main category

9)

The collapse and expand button shows or hides sub accounts(for sub accounts refer *8*)

10)

Profit & Loss A/c:

It is a account which shows the net profit or loss for a specific period of time

Balance sheet

it shows company financial position as on date

(In profit & loss A/c we write heading as profit and loss account of ABC ltd for the year ended____date .but in balance sheet we write Balance sheet as on ____date)

11)

open any report click on Excel button and then create new worksheet (Excel must be installed in your PC)

you would report to excel to be able to manipulate the numbers search for data,statistical analysis, creating graphs

12)

Beginning balance come from bank statement and it is also a last months reconciled balance

Ending balance comes from bank statement and equals the total amount of cleared transactions

13)

By reconciling you make sure that all transactions that went through bank are also present in your accounting system

cash transactions that did not flow through the bank cannot be reconciled using bank statement

items not reconciled or either pending for the following month or if they are mistake or duplicated then they must be deleted

14)

cost of goods are directly attributed to a sale , they only exist because the sale exists, such as the cost of inventory sold,sub contractor expense

A total sale minus cogs is used to calculate gross profit or gross margin

operating expenses usually are not directly correlated to a sale and are fixed such as rent

15)

Memorize Reports:(CRT+M) Automate Transaction Entry will create automatically the transaction in the future.

Examples given are just for understanding purpose only that may or may not related to this concept but used for better understanding)