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8/8/2019 Mastering Quick Books i
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MASTERING QUICKBOOKS ISulo Musyaju
September 16, 2010
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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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Save The Date
Mastering QuickBooks IIOctober 28, 20105:30 7:30 PM