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Chapter 1
Introducing QuickBooks
Topics
This chapter covers the following topics:
- QuickBooks Products
- Working with QuickBooks Files
- Creating and Restoring Backup Files
- Touring the QuickBooks User Interface
- Introducing QuickBooks Transactions
- QuickBooks Help
- A Brief Introduction to Accounting
QuickBooks acts as both a bookkeeping/accounting program and a financial management tool. Once you set up your company file and record your financial transactions, the program helps you track and manage income, expenses, inventory, job costing, receivables, payables, and much more. With QuickBooks reports, you can evaluate your organization’s performance and make informed business decisions.
QuickBooks is designed so you can keep your books even if you haven’t mastered the debits and credits of double-entry accounting. However, you need to use its features properly to ensure that your financial records are correct. To do that, you need to understand how QuickBooks works, how company files are set up, how to perform bookkeeping tasks with the program’s features, and finally how to retrieve information about your business from your QuickBooks company file.
This chapter begins with an introduction to the basics of QuickBooks. You’ll learn about the QuickBooks product line. You’ll also learn how to work with QuickBooks company files. Then, you’ll get to know a little bit about the program’s interface, how to record transactions, and how to obtain QuickBooks help. Finally, the chapter concludes with a brief overview of what you need to know about accounting to use QuickBooks properly.
Note: For the computer practice in this chapter, restore the sample file, sample_prod- uct-based business 2015 (Portable).QBM. (Or, if you are using QuickBooks 2014, restore sample_product-based business 2014 (Portable).QBM .)
QuickBooks Products
QuickBooks Products The QuickBooks product line represents a broad set of accounting and bookkeeping tools that are easy to learn. Financial tools, such as general ledger, accounts receivable, accounts payable, inventory, sales tax, and financial reporting are built into QuickBooks products. In addition, Intuit offers many optional, fee-based products and services, such as payroll services, merchant account services, and time-tracking products that integrate with QuickBooks.
QuickBooks Editions
QuickBooks comes in several product editions to satisfy different needs and budgets: QuickBooks Online, QuickBooks Pro, QuickBooks Premier, QuickBooks Accountant, and QuickBooks Enterprise Solutions. In addition, QuickBooks Premier and Enterprise Solutions editions offer six industry- specific editions: General Business, Contractor, Manufacturers & Wholesaler, Nonprofit, Professional Services, and Retail.
Note: All QuickBooks editions support multiple simultaneous users. However, to access a company file in multi-user mode, each user must run the same version of QuickBooks.
This book covers QuickBooks Pro, non-industry-specific QuickBooks Premier, and QuickBooks Accountant, because these editions are the most commonly used. This book does not cover QuickBooks Enterprise Solutions, although it is easy to learn once you’ve mastered Pro, Premier, or Accountant. Also, the book does not cover QuickBooks Online, which is a web-based product that looks and works differently than the editions covered in this book. To compare all QuickBooks editions, see www.quickbooks.com.
QuickBooks Releases
Initially, you install a specific version of QuickBooks, such as QuickBooks 2014 or 2015. After a version is released for sale, users may uncover errors in the software. When that happens, Intuit corrects the errors and updates the program with patches distributed via the Internet. Each patch represents a release of the QuickBooks program. To see which software release you have installed, launch QuickBooks, and then press F2 or Ctrl+1. At the top of the Product Information window, you’ll see the label “Product” followed by the QuickBooks product and release, such as “QuickBooks Accountant 2015 Release R1P”. To install the latest maintenance release, on the Help menu, choose Update QuickBooks. Then, follow the instructions on the Update QuickBooks dialog box’s screens to download and install maintenance releases into QuickBooks.
Note: This book is based on QuickBooks Accountant 2015 release R1P. If your comput- er is running a newer release (a higher release number, such as R3P), you may see slight differences compared to the descriptions and screens in this book.
Sample Files
This book uses the sample files that come with QuickBooks: Rock Castle Construction is set up as a product-based business and Larry’s Landscaping represents a service-based business. These sample files demonstrate most of QuickBooks features and provide a safe way to experiment with QuickBooks.
QuickBooks Products
Computer Practice
Follow these steps to open a sample file:
- To launch QuickBooks, double-click the program icon on your desktop or select the QuickBooks entry from the Windows Start menu.
QuickBooks will either display the No Company Open window (Figure 1-2) or open the last company file you worked on. The No Company Open window appears if you are launching QuickBooks for the first time or you closed your company file before exiting your last Quick- Books session. If you did not close the last company file you worked on before exiting your QuickBooks session, the program opens that company file.
- If the No Company Open window does not appear, on the File menu, choose Close Company. If QuickBooks asks if you want to back up your file, click No.
- When the No Company Open window appears, click the “Open a sample file” button, and then choose Sample product-based business from the drop-down list. The QuickBooks Information screen (shown in Figure 1-2) appears.
- To open the sample file, click OK. If an Accountant Center or External Accountant message appears, turn off the Show window when opening a company file checkbox, and then click the X at the Accountant Center window’s top right corner.
The sample file is open and ready for you to begin exploring.
Figure 1-2 Sample File Information Screen
Figure 1-1 No Company Open Window
Previously opened company files
QuickBooks Products
Opening a QuickBooks Company File
If you work with more than one company, you’ll have a QuickBooks company file for each one. You can switch from one company file to another at any time. QuickBooks provides easy access to company files you’ve worked with before. You can also open any company file with a few more clicks.
Here is an easy way to open a company file that you’ve worked on previously:
- On the File menu, choose Open Previous Company.
- On the submenu that appears, choose the company file you want to open.
Tip: You can change the number of company files that appear in the Open Previous Company submenu. On the File menu , choose Open Previous Company , and then on the submenu, choose Set number of previous companies. (This entry is grayed out if no company file is open.) In the box, type the number of company files you want to see in the submenu (up to 20), and then click OK.
If the company file you want to open doesn’t appear on the Open Previous Company submenu, follow these steps instead:
- On the File menu, choose Open or Restore Company.
- In the Open or Restore Company dialog box, select the Open a company file option, and then click Next.
- In the Open a Company dialog box, navigate to the folder that contains the company file you want to open. In the Name list, click the company file name, and then click Open.
Note: If you use QuickBooks Accountant or Enterprise Solutions, you can open two company files at the same time (On the File menu, choose Open Second Company .) However, the activities you can perform in the second file are very limited. Unless you want to open the file to look for information, it’s best to use the Open Previous Company or Open or Restore Company menu entry to open a company file.
Closing a QuickBooks File
You don’t have to explicitly save a company file. QuickBooks saves the information you enter as you work. The program also closes the company file that’s open when you open another company file or close the QuickBooks program. If you want to close a company file, on the File menu, choose Close Company.
Closing the QuickBooks Program
Because QuickBooks saves your data as you work, you can simply close the program. To exit QuickBooks, on the File menu, choose Exit (or click the X at the program window’s top-right corner).
Creating and Restoring Portable Company Files
- In the message box that tells you where QuickBooks has saved the portable file, click OK.
The program reopens its windows and you can resume working on your company file. The file extension for a portable file is .qbm, such as sample_portable_file.qbm. That way, you can identify a portable file even if it doesn’t contain the word “portable” in its name.
Restoring a Portable Company File
Here are the steps to restoring a portable company file to a regular QuickBooks company file:
Computer Practice
- On the File menu, choose Open or Restore Company.
- In the Open or Restore Company dialog box, select the Restore a portable file option, as shown in Figure 1-4, and then click Next.
- In the Open Portable Company File dialog box, navigate to the folder that contains the portable company file that you want to restore.
If you don’t know where this book’s portable company files are located on your computer, ask your instructor.
- In the file list, click the file you want to restore sample_product-based business 2015 (Portable). qbm. Or, if you are using QuickBooks 2014, restore sample_product-based business 2014 (Porta- ble).qbm ., and then click Open.
The next screen tells you that you need to choose where you want to store the company file that QuickBooks creates from the portable company file. Click Next.
- In the Save Company File as dialog box, shown in Figure 1-5, navigate to the folder where you want to restore the file.
If you don’t know where to restore the file, ask your instructor.
Figure 1-4 Restore a Portable Company File
Creating and Restoring Backup Files
- In the File name box, edit the file name if you want to use a different file name for the restored file, such as adding _“Restored ” to the name. Then, click Save.
If QuickBooks asks you to update your company file, click Yes.
While QuickBooks restores the portable company file to a regular company file, the Working message box shows the restoration progress. (If you restore a sample file, you must first click OK in the sample file QuickBooks Information message box.)
- When the process is complete, click OK in the message box that tells you the portable company file has been opened successfully.
Now, your company file is open and ready for you to begin work.
Creating and Restoring Backup Files Your financial information is important and you don’t want to lose it. To prevent or minimize data loss, you should regularly back up your company files. Although you may back up all the data on your computer with dedicated backup software, you can also create backup files within QuickBooks as an added level of security. For example, if you spend several hours on a task, you can create a backup file immediately to protect your data until your nightly system backup runs. That way, if your computer’s hard drive fails or another disaster occurs, you can restore your backup to another computer and resume your work. You can also set up scheduled backups within QuickBooks.
Note: Don’t create portable company files to use as backup files. Backup files contain more information about your company than portable files do.
Creating a Backup File
You can back up a company file immediately or set up a backup schedule so QuickBooks automatically creates your backups on the days and times you specify.
Figure 1-5 Choose Location to Restore File
Creating and Restoring Backup Files
- In the Backup Options dialog box, click OK.
- In the Create Backup screen, shown in Figure 1-8, you can create an immediate backup or set up a backup schedule. To set up a schedule, select the Only schedule future backups option, and then click Next.
To save a backup immediately, select the Save it now option, and then click Finish. When the backup is complete, you see the QuickBooks Information message box that tells you the filename and folder location for the backup.
- In the Save Copy or Backup screen, click New below the Back Up on a Schedule table, shown in Figure 1-9.
- In the Schedule Backup dialog box (Figure 1-10), type a name for the backup schedule, such as Nightly or Weekly. Click Browse to select the backup folder.
Figure 1-8 Setting up a Backup Schedule
Figure 1-9 Create a Backup Schedule
Creating and Restoring Backup Files
- In the Start time boxes, choose the time when you want QuickBooks to create the backup file. Turn on the day checkboxes to specify which days you want the program to create a backup.
- After you specify the schedule settings, click OK to close the Schedule Backup dialog box.
- In the Store Windows Password window that opens, type your Windows username and pass- word, and then click OK.
The new schedule appears in the Back Up on a Schedule table.
- In the Save Copy or Backup dialog box, click Finish. In the message box that tells you the backups have been scheduled, click OK.
Your backup schedule is ready. When the next day and time that you designated arrives, QuickBooks creates a backup file of your company file. The file extension for QuickBooks backup files is .qbb, for example, sample_file_backup.qbb.
Restoring a Backup File
If you need to restore a QuickBooks backup file, follow these steps:
- On the File menu, choose Open or Restore Company.
- In the Open or Restore Company dialog box, select the Restore a backup copy option, and then click Next.
- On the next Open or Restore Company screen, select the Local backup option, and then click Next.
If you want to restore a backup file created through Intuit’s fee-based online backup service, select the Online backup option instead.
Figure 1-10 Defining the Backup Schedule
Touring the QuickBooks User Interface
The Home Page ’s Company and Banking sections include other features you use frequently, such as Chart of Accounts in the Company section and Write Checks in the Banking section.
The icons that appear on the Home Page depend on the preferences you chose when you created your company file. For example, the Employees panel won’t appear if you told QuickBooks you don’t have employees. Other settings determine whether you see icons, such as Purchase Orders or Sales Receipts.
The Insights Tab
The Insights tab (new in QuickBooks 2015) appears to the right of the Home Page tab at the Home Page window’s top-left corner. The Insights tab (Figure 1-12) provides a high-level view of the company’s financial activity. Initially, the top panel displays a Profit & Loss graph that shows income, expenses, and profit by month. Click the left or right arrow on either side of the panel to display other high-level graphs, such as Top Customers by Sales.
The bottom half of the tab displays information about income and expenses. The colored bars in the Income section show the totals for unpaid invoices, overdue invoices, and payments received in the past
30 days. The Expenses pie chart helps identify your most prevalent expenses.
You can look at details by clicking within the Insights graphs. For example, clicking a month’s bar in the Profit & Loss graph runs a Profit & Loss Detail report for that month. Click a horizontal bar in the Income section to open Income Tracker to that category of invoice.
Figure 1-11 The Home Page
Touring the QuickBooks User Interface
Using the Menu Bar and Icon Bar
The menu bar at the top of the QuickBooks main window is always visible and contains every QuickBooks feature. But the Favorites menu and the icon bar are two methods for keeping your most frequently-used features within easy reach. To add your favorite features to the Favorites menu, choose Favorites , and then choose Customize Favorites. Select an entry you want to add to the Favorites menu, and then click Add. After you add items to the Favorites menu, you can access them by choosing Favorites on the menu bar, and then choosing the entry you want. The icon bar, which appears on the left side of the QuickBooks’ main window, makes it easy to access the programs features. Initially, it contains shortcuts to popular windows, such as Income Tracker , QuickBooks Centers (labeled Customers, Vendors, and Employees), Create Invoices (labeled Invoice), and Enter Bills (labeled Bill).
You can streamline your work by adding your favorite features to the My Shortcuts section of the icon bar. You can also remove entries or rearrange the order in which the shortcuts appear. To learn how to customize the icon bar, search QuickBooks Help for icon bar , and then choose the Use the Icon Bar topic.
QuickBooks Centers
QuickBooks Centers (Customer, Vendor, Employee, and so on) provide quick access to common tasks and information. You can view and create transactions, such as invoices in the Customer Center (Figure 1-13) and bills in the Vendor Center. Each center also displays information, such as names and addresses, contact, to-do items, notes, and more.
Figure 1-12 The Insights Tab
Touring the QuickBooks User Interface
In addition, you can take action on transactions in the table. For example, click the down arrow in an open invoices Action cell and you can choose to receive payment on that invoice, print the row, or email the row.
Computer Practice
- In the icon bar, click Income Tracker.
- In the Income Tracker window, click the Open Invoices bar at the top of the window.
- Click the Action cell for one of the invoices, and then choose Receive Payment.
- Close the Receive Payment window by clicking the X at the window’s top right.
- Close the Income Tracker window.
Snapshots
The Company Snapshot window (Figure 1-15) summarizes various aspects of your company’s finances, like income and expense trends, account balances, customers who owe you money, best-selling items, expense breakdown, and reminders. To open the Company Snapshot window, on the Company menu, choose Company Snapshot or click the Snapshots entry in the icon bar. Then, click the Company , Payments , or Customer tab to display overall company info, Accounts Receivable and payment info, or customer info, respectively. You can choose the views you want to see. To add or remove views on a tab, click the tab, and then click Add Content.
Figure 1-14 Income Tracker
Touring the QuickBooks User Interface
Calendar
The Calendar window (see Figure 1-16) shows when transactions and to-dos were recorded or are due. (The Entered date is the transaction date entered in the transaction form, not the date that someone created the transaction.) You can use the Calendar to see which to-dos are coming up or are past due. You can also view past due or almost due transactions. To open the Calendar , in the icon bar, click Calendar , or on the Company menu, choose Calendar.
Figure 1-15 The Company Snapshot Window
Figure 1-16 The Calendar Window
Introducing QuickBooks Transactions
Computer Practice
Follow these steps to explore this form:
- On the Home Page , click Enter Bills.
- In the Enter Bills window, click the left arrow at the window’s top-left corner to display the previous bill that was entered.
- Click the down arrow in the Vendor box to display the vendor drop-down list.
- Click the calendar icon next to the Date box to view the calendar.
- If you make any changes to the bill, click Revert to undo those changes.
- Close the Enter Bills window.
When you record a transaction in a QuickBooks transaction window, the program does the accounting for you in the background. For example, when you record a bill, QuickBooks updates your accounts payable account to show how much you owe the vendor. Then when you pay the bill, QuickBooks reduces the amount in the accounts payable account and vendor balance to reflect the payment you made. It increases the appropriate expense account to show what you spent money on.
Tip: On the transaction window’s right, the History section provides a summary of recent activity related to this vendor or customer. For example, click the link shown in blue text to the right of the Open balance label to see the transactions that contribute to your open balance with the vendor. In the Recent Transactions list, click the blue link to open the transaction in its corresponding transaction window.
Lists
QuickBooks lists can help you work quickly and accurately. By picking from lists instead of typing, you can enter values quickly and consistently. And when you fill in fields when you create a customer, vendor, employee, or other record, QuickBooks automatically pulls that information into the transactions you create. For example, when you choose a vendor in the Enter Bills window, the program fills in the name, address, payment terms, and other values from the vendor record (as shown in Figure 1-17).
Some lists appear on the Lists menu, such as the Chart of Accounts List , Item List , Terms List , and Price Level List. To open a list window for one of these lists, on the Lists menu, choose the list you want. (A few lists are one level deeper. To open these lists, on the Lists menu, choose Customer & Vendor Profile Lists , and then choose the list you want.) The Customer & Job List , Vendor List , and Employee List appear in their respective centers (see page 15).
Accounts
Accounts come in various types to track your business finances: what you earn, what you spend, how much you owe to others, how much others owe you, and so on. The chart of accounts is a list of all the accounts you use to categorize your finances.
The Chart of Accounts is initially sorted by account number if you turn on account numbers (see Figure 1-18). Typical account numbering groups different types of accounts within number ranges. The Balance Total column shows balances for accounts that appear on the Balance Sheet: asset, liability, and equity accounts (except for Retained Earnings).
Introducing QuickBooks Transactions
Items
QuickBooks items help you track what you buy and sell. You also create items for other things you add to sales forms, like discounts, shipping charges, and subtotals. If you use QuickBooks sales transactions like invoices and sales receipts, you have to create items. The only way you can fill in an invoice or sales receipt in QuickBooks is by adding items to the transaction. Because every business is different, you can create items for the products and services you sell.
Items link what you buy and sell with the accounts in your chart of accounts. QuickBooks uses those links to automatically create accounting entries to go with the transactions you record. When you create an item, you tell QuickBooks all about it: what the item is, what you pay for it, the price you sell it for, and the accounts you use to track the corresponding income, expense, and so on. For example, in the Item List shown in Figure 1-19, the Cabinet Pulls item is linked to the Materials Income account in the Chart of Accounts. Whenever you add that item to an invoice, QuickBooks increases the value in the Materials Income account by the amount of the sale. Items also make it easy to analyze your business in different ways. You can set up items to track income and expenses to the level of detail you want.
Figure 1-18 The Chart of Accounts
