mastering quick books i

8/8/2019 Mastering Quick Books i

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MASTERING QUICKBOOKS ISulo Musyaju

September 16, 2010


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Mastering QuickBooks I Sulo Musyaju 2

Objectives

Making QuickBooks a tool to manage your finance:How QuickBooks works?Get around in QuickBooksLearn common finance and accounting terms inQuickBooksGet familiar with the QuickBooks features tomanage Accounts Payable Accounts Receivables and Cash Flow


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Getting Around

OverviewVendor Center

Customer Center BankingReporting


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Navigating

Pro and Premier versionMenu Bar

Icon Bar

Work Flow Menu


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Navigating

Online versionTab Menu

Work Flow Menu


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Company and Users

One time set up through initial interview


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Preferences


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Chart of Accounts

Complete list of business accounts. Provides a frameworkto track and record transactions and balances

Income

Expenses

Equity

Liabilities

Assets

Five categories of accounts common to all businesses:

Note: Every account in QuickBooks must be assigned a category. For meaningfulinformation transactions must be recorded in consistent accounts.


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Chart of Accounts Cont

Factors to keep in mind in developing chart of accountsWhat accounts you need?What is the right level of detail?

It depends!Type of business e.g. Manufacturing, sales or servicesThe reporting and compliance requirements

Management

Investors and other stakeholdersTax and GAAP reportingNon profit - donors, grant guidelinesSector specific regulatory reporting requirement


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Common Accounting Terms

Assets:Everything your business ownse.g. cash, machine equipment, $$ customers owe you(accounts receivable)

LiabilitiesWhat the company owes to its vendors and other peoplee.g. bank loan, credit card dues, taxes payable, $$ owed tovendors (accounts payable)

Equity:What the business is worth to you - difference between whatthe business owns and what its owes to others (net worth)Equity = Assets - Liabilities


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Common Accounting Terms Cont

Cash basis versus Accrual BasisCash basis:

Income is recorded when money from sales is received and expenseswhen bills are paid

Accrual BasisIncome is recorded at the time of sale and expenses when you receivethe product and services.

Most start ups use cash basis unless inventory involved

Note: QuickBooks allows you to switch between cash and accrualreports at any time, regardless of which bookkeeping method youhave chosen for tax purpose!


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QuickBooks Accounting Features

General journal transactionsTraditional accounting method

Total amount in the debit column mustequal to the total amount in the creditcolumn

Each amount is assigned to an account inthe chart of accounts


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Select Modules

Accounts Payables:set-up new vendors

enter invoicesissue payments

Accounts Receivables:set up new customers

prepare customer invoicesrecord receipts

Monthly Activitiesreconcile bank statements

Impact on finances?cash flowkey indicators

Navigating the system


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Managing Accounts Payables

Adding new vendorsEntering vendor bills

Paying Bills (checks, electronic payments)Recording purchases paid for on the spot(without a vendor bills)


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Managing Receivables

Adding new customersPreparing a sales invoice

Viewing a customer register Receiving payment from a customer Making a deposit


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Adding Accounts

Adding new accounts Adding a sub accountDeactivating an accountCase against deleting an account


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Bank Reconciliation

End of the month procedure: Ensure thatQuickBooks record and bank account are tellinga same story about how much cash the business

hasWhat do you need?Bank statements

An opportunity for you to gain an overview of

your cash position and minimize surprisesPending checksInterest and charges


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The Financial Health of theBusiness

Reviewing open transactions:

Receivable: Who still owes you money?

Who are your best customers? (volume & payments)

Payables : Which bills still need to be paid?Can you negotiate better terms?

Periodically review to ensure prudent management of the business


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The Financial Health of theBusiness Cont

Reviewing financial statements:Income Statement: Summary of income, expenses, net profit or loss.

Did the business make money or lost?

Balance Sheet: Snapshot of the company assets liabilities and equityon a given date.W hat is the net worth of your business?

Cash Flow Statement : Shows receipts and payments during a specified

period and cash balance at a given date.W ill the business have enough cash to last throughnext stepping stone ?

Periodic review will provide great tools for strategic planning!


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Managing Cash Flow

Payables:materials,equipment,overhead,

labor etc

Inventory

AccountsReceivablefrom thecustomers

Cash $$ Purchases

Sales -products

Production

Collections

Sales - services


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Key Performance Indicators

ProfitabilityGross ProfitNet profit

Efficiency (Turnover Ratios)

Cash Conversion Cycle

Profit/loss vs. cash flow


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Exercises

Accounts PayableEnter the Staples bill from the following slide in QuickBooksProcess a check payment for the bill

Add vendor as need

Accounts receivableCreate a Customer invoice for engineering services valued$5,000 sold to Rio International on August 25th.Rio International is a new customer. Billing address 100 MainStreet, Cambridge, MA 02142


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ExercisesCont..

Review financial statementsSample statement company available in

QuickBooks, or Choose your own company


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Tips

Memorized TransactionsExiting QuickBooks

Backup files


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Profitability RatiosGross Profit % = (Gross Profit $/Net Sales)*100

Net Profit % = (Net Profit $/Net Sales)*100

Turnover Ratios Accounts Receivable Turnover = Net Sales/Average Receivables

Days Receivables Outstanding = 365/AR Turnover Ratio

Accounts Payable Turnover = Net Sales/Average PayablesDays Payables Outstanding = 365/AP Turnover Ratio

Fixed Assets Turnover = Net Sales/Average Net Fixed Assets

Performance Indicators


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Questions?


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Thank You!

Sulo Musyaju617.335.9597, [email protected]

www.musyaju.com


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