Overview
Accounting is undoubtedly a discipline that has seen an incredible change in the recent past. With the widespread technological advancement, most companies are adopting new accounting systems such as online and desktop software solutions. Such software stores vital financial information while still automating, analyzing and reporting such information over a considerable low bookkeeping time. The most commonly used accounting software are QuickBooks, Sage 50, Accounting (formerly Peachtree), LessAccounting Online, GnuCash Accounting and Sage Business Cloud Accounting.
QuickBooks Pro (QB) is an accounting software developed by Intuit Inc., a company whose other products include Simple Start Plus Pack, QuickBooks Premier Contractor and QuickBooks Enterprise Solutions (“QuickBooks,” 2018). Current studies show that in the U.S. only, there are more than 30 million QuickBooks users. QB is ideal for small and medium enterprises (SMEs) and is designed to carry out various accounting tasks in an enterprise. QB can manage payroll, enabling a reliable payment of salaries to employees. Additionally, businesses owners can easily and efficiently manage inventory through proper stock-taking and tracking. Moreover, QB enables its users to manage revenues and expenditures among other needs of a small business. QB has various features that have been included to support its functionality, all of which depend on an organization’s needs. They are;
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Marketing tools
Merchant services
Products and supplies
Training solutions
With QB, various accounting practices have become much easier and efficient. These practices, such as invoicing and financial reporting, are very essential in an organization, hence should be run effectively and at a comparatively low cost. QB provides a solution for this needs. For instance, QB enables one to automatically invoice customers upon the maturity of their accounts receivable. Also, one can be able to generate the various financial statements such as balance sheets and income statements whenever need. To most businesses operating in a tedious and busy bookkeeping procedure, QB is a good solution.
The latest version of the software is QuickBooks Pro 2018, which is selling at $299.99. However, Intuit Inc. offers a free 30-days trial to customers who are willing to buy the software. Furthermore, people with the older versions of the software such as QuickBooks Pro 2016 and 2017 can update them to the latest version at comfortable considerations. Normally, Intuit Inc. updates QB annually, which allows for innovation and fixation of bugs among other highlighted problems.
QuickBooks Pro is an OS-friendly software solution, as it operates smoothly over windows. The basic system requirements for QuickBooks Pro are;
At least a 1.8 GHz processor
1 GB od disk storage
256 MB of RAM (single user)
512 MB of RAM (multiple users)
Special Hardware and Software Requirements
Additionally, downloading the software requires a high-speed internet connection. Internet Explorer 6.0 or a higher version would be ideal. Furthermore, downloading requires at least 2.5 GB of free disk space. Also, QB has an export reports and letters functionality. Therefore, it requires Microsoft Word 2000 or above. Likewise, since the software needs Microsoft Outlook, Outlook 2000 or above for contact synchronization.
Transactional Processing – Revenue Cycle
The daily accounting routine in an enterprise encompasses various key practices such as revenue collection. Recording sales are one of the major accounting procedure in any venture, which can prove to be tedious and very likely to be done improperly especially in a very busy enterprise. QB offers a comprehensive revenue recording tool with genuine functionalities such as registering, tracking and clearing revenue. In QB, one can easily track sales by creating items and using them each time a sale is made. Conversely, one may elect creating a revenue account. Generally, processing revenue takes the form of three major steps: creating a revenue account, creating items and recording revenue.
QB allows a user to create a revenue account whereupon all business transactions pertaining to sales are recorded. The process involves selecting the revenue account from a list of the chart of accounts already set in the system. Consequently, QB allows one to customize the revenue account created. For instance, one may modify the revenue account name, description, and its memo.
Subsequently, QB allows its users to create a variety of items, which are thereafter linked with revenue accounts already created in the system. Such items are either products or services, whose transactions are revenue-related. Creating items enables one to track financial transactions of revenue generating assets in the enterprise. For instance, in a business operates in selling products, the items list would, therefore, include all products sold. As such, any sales transactions made for these products would entail linking the respective item with revenue. Conversely, if a business operates in the service industry, the item list would, therefore, encompass the various forms of services offered by the business and the respective details of the services such as prices and descriptions.
Lastly, QB assists one to record revenue by directly entering the details of a transaction relating to any revenue collected from a customer. Whenever a customer pays for products delivered or services offered to them, one is able to record such transactions in QB. Recording revenue entails, primarily, making entries against customers or the source of the income (“How to Enter Revenue Into QuickBooks,” 2013). Entries made on sales are stored in the system’s database and are thereafter retrievable when queried. That implies that one can be able to make sales or revenue reports on the sales or sales-related entries already made in the system. It is crucial to note that QB allows both credit and cash sales.
To illustrate how to make revenue entries, consider a sales transaction, say, the sale of a product A in an enterprise. First, it is important to consider whether product A is in the items list. If not, the product will be created through the following steps.
Click the “Lists” menu and then “Item List”
Select “Item” at the bottom of the list and then click “New”
Select an item type, which relates to the product.
Click the “Account” drop-down list, and select the most appropriate income account.
Complete the required item fields such as the name (Product A), and click “Save & Close.”
After creating the item, the following steps are followed in recording revenue.
Click the “Customers” menu, then click “Create Invoices.”
Click the “Customer: Job drop-down list and select the customer from which the revenue was received, that is, to whom sales were made. In this case, the customer must have been entered into the system. Otherwise, create a new customer in the Customer: Job drop-down field by entering the name and pressing the “Enter” key. Click “Yes” to use the QuickAdd and enter the respective customer’s information.
Verify the Date and Invoice Number fields.
Click the first blank row in the item column and select an item from the list.
Click “Save & Close” to close the window. The transaction gets saved to the account specified when creating it.
Transactional Processing – Expenditure Cycle
In any given business setting, revenues are weighed against costs. Normally, the business’s expenditure is financed by the income generated from various financial, investment, and operational activities. As such, the expenditure cycle is of great essence to the completion of the general accounting cycle of an entity. QB allows one to monitor and control the expenditure cycle through recording the costs attributed to expenditure transaction. The various forms of expenditure in a business include salaries, prepayments, and general expenses.
In QB, anything bought with a debit card, credit card, online payment, or through a bank transfer is considered to be an expense. These expenses are factored against various assets that a company has. The most commonly used asset to pay off expenses is cash at bank, whereby one is required to link the QB to at least one bank account. Also, one may elect to open another account, say, a cash account in the Charts of Account section if the business accepts cash. Generally, the recording of expenses entails three major steps: identifying the type of an expense, selecting the recipient (payee) and choosing the account type.
First, expenses fall under the supplier’s category in QB. Expenses accounts are directly linked to payments, hence the need to link bank and credit card accounts when setting up QB (Biafore, 2013). Consequently, one may connect to a new account through the Connect account option if no accounts have been created in the past. QB enables a user to categorize expenses, which can be reviewed in the Profit and Loss Section. The software also provides guidance in case one is unable to categorize expenses. To facilitate a quick and a unique identification of an expense, QB allows one to provide a picture or a PDF of the receipt related to the expense. As such, tax payments also become effective as transactions evidence can be retrieved easily from the system.
QB also allows accountants to match various transactions and expenses resulting in a particular expenditure. Therefore, one is able to track a transaction from payments and delivery of the services or products paid for.
To illustrate this, take a case in point of recording an expense involving a bank transaction., say, paying salaries. Such a transaction would involve the following process.
Select Banking from the menu in QB expenses window. If no bank account exists, one can easily create a new one. Creating transfer is done through transfers, checks and journal entries as well as imported bank transactions.
Select one of the bank accounts at the top and within the row of the transaction, click to select it.
Change the reason button from Add to Transfer
In the account drop-down list, select the other account that will be affected. Normally, this is the expense account.
Select transfer and select the other bank account at the top to view the transaction.
Final Thoughts
Every stakeholder in the accounting sector has embarked on developing a more efficient and cost-effective accounting system. Stakeholders in the information technology sector dominate in these innovations, where more advanced accounting systems have been introduced. The vast technological advancement has influenced most of the accounting practices and procedures carried out in a business. Giant corporations in the accounting sector such as Intuit Inc. have invested incredibly on innovation in a bid to ensure that more user-friendly software solutions avail customers. Small-scale ventures are on the rise following the diversification of business practices as well as the emergence of business opportunities. The tremendous growth in markets has also factored the emergence of many small and medium enterprise (SMEs) globally. One evident nature of SMEs is the existence of petty transactions, which can be exceedingly overwhelming and costly to manage. QuickBooks Pro 2018 offers an explicitly cost-effective software solution to the numerous transactions of any given entity operating as an SME.
QuickBooks Pro 2018 is a comprehensive accounting system that incorporates all the basic accounting techniques used in business operations. As such, the software does not bypass the essential accounting procedures but instead ensures that they are executed in a more efficient way. Accounting is in itself a complex task in an organization, and QB is a model that enables both accountant and non-accountant personnel in an organization to carry on bookkeeping and financial reporting in a smooth manner.
In this paper, QB was selected for very several reasons, all of which boil down to the ease of access and the user-friendliness portrayed by QB. The software is arguably one of the easiest to learn the platform, offering a range of inbuilt accounting functionalities. The software is readily adaptable to any small scale business setting. Also, QB is ideal for a business with many similar transactions, as it can monitor and record such transactions as well as provide detailed financial reports whenever required.
Regarding the use, QB is user-friendly to not only accountants but also staff who lack accounting skills. While using QuickBooks enables an entity to achieve efficiency in gathering and analyzing financial information, there are some drawbacks that managers or business owners should consider before purchasing the software. First, QB is relatively a bookkeeping software providing the general ledger functionalities. Therefore, the software is not necessarily GAAP compliant. Furthermore, QB supports only a few internal controls. Additionally, a challenge that accountants are most likely to encounter in implementing QB is its inability to execute the financial management tool.
QB is limited to forecast the financial position of an entity, hence unable to implement financial management. Therefore, most managers will find QB as ineffective in assisting them to conduct the various managerial functions such as those in costing and management accounting. As such, accountants using QB will be forced to apply other software solutions such as spreadsheets in order to arrive at financial management conclusions. Additionally, QB is relatively limited resources. For instance, at6hough QB manages and monitors payroll, it does not measure or track important management concerns such as employee’s performance. Also, the payroll option is not linked with task management or revenue module. Therefore, it remains a challenge to track how well employees’ performance impacts on the entity’s revenue.
References
Biafore, B. (2013). QuickBooks 2014: The Missing Manual: The Official Intuit Guide to QuickBooks 2014 . " O'Reilly Media, Inc.".
How to Enter Revenue into QuickBooks (2018). Retrieved from http://smallbusiness.chron.com/enter-revenue-quickbooks-61247.html
Manage expenses | QuickBooks Video Tutorials. (2018). Retrieved from https://quickbooks.intuit.com/tutorials/lessons/manage-expenses-in-quickbooks/
QuickBooks. (2018). How to Record Expenses in QuickBooks - QuickBooks Tutorials. Retrieved from https://quickbooks.intuit.com/ca/tutorials/expenses/
QuickBooks. (2018). Retrieved from https://http- download.intuit.com/http.intuit/CMO/quickbooks/2016/docs/QuickBooks_2016_User Guide.pdf
QuickBooks: WHAT IS IT, WHAT DOES IT DO AND DO YOU REALLY NEED IT? - KWC Richmond. (2018). Retrieved from http://www.bieglercpa.com/quickbooks- really-need
Appendix A
Sales Revenue Report
Figure 1 : Merchandise Sales Report
Figure 1 shows the revenue report generated for the period ended June 7, 2018. QB allows one to generate various financial reports, thereby enabling one to track performance.
Appendix B
Linking a Bank Account in QuickBooks Pro 2016
Figure 2 : Opening a Transactional Bank Account
Figure 2 shows the caption of the process of linking the system with a bank account. The essence of opening a bank account is to facilitate funding of the various expenditures of a business. The account details are entered, whereby all expenses will be linked to the account. QB allows the opening of multiple bank accounts.
