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Managing Expenses
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  1. Managing Expenses Chapter 3

  2. Objectives • Set up vendors in the Vendor list • Understand how to use classes in QuickBooks • Use QuickBooks for job costing • Enter expense transactions in several different ways • Manage Accounts Payable transactions • Print checks 113

  3. Objectives (contd.) • Void Checks • Track Loans using the QuickBooks Loan Manager • Create and apply vendor credits • Handle deposits and refunds from Vendors • Track petty cash • Track credit card charges and payments • Create reports about vendor transactions 113

  4. Entering Expenses in QuickBooks • Cash Vendors: • You’ll skip the Accounts Payable account and just write checks, coding the checks to the appropriate expense accounts • Credit Vendors: • Track bills and bill payments using the Accounts Payable account which will track how much you owe these Vendors 113

  5. Steps for Entering Expenses 114

  6. Setting up Vendors • Vendors include everyone from whom you purchase products or services • Select the Lists menu, and then select VendorList; or, click Vendors on the VendorNavigator • When your vendor is also your customer, the customer name must be slightly different from the vendor name 116

  7. Activating Class Tracking • Class Tracking in QuickBooks allows you to: • Separate your income and expenses by line of business, department, location, profit center, or any other meaningful breakdownof your business • Create separate profit and loss reports for each class of the business • To activate Class Tracking: • Select the Edit menu, and then select Preferences • Scroll to the top and click Accounting • Select the Company Preferences tab, and check the box next to Use class tracking 121

  8. Tracking Job Costs • Job Costing refers to tracking the expenses for each customer or job • Use the Customer:Job column to link each expense account or Item with the customer or job to which it applies • Profit & Loss by Job report shows income and expenses separately for each job: • Select the Reports menu, select Company & Financial, and then select Profit & Loss by Job 123

  9. Paying Vendors • With QuickBooks, you can pay your vendors by check, credit card, electronic funds transfer, or in cash (although cash is not recommended) • The three common situations are: • Manually write a check and then record the transaction in a QuickBooks account register • Use the Write Checks window to write and print checks • Use the Enter Billswindow to record Accounts Payable and then use the Pay Billswindow to pay the bill 125

  10. Using Registers • Select the Lists menu and then select Chart of Accounts or press CTRL+A • To display the Checking account register, double-click the Checking account in the Chart of Accounts • Enter the transaction and press Record • To apply your purchase to more than one account: • Click the Splits button at the bottom left of the register, which allows you to split the expenses among multiple accounts 125

  11. Using Write Checks without Using A/P • Select the Banking menu and then select Write Checks • Use the Write Checks window to record your expenses: • If you’re tracking job costs or classes and are not using the Accounts Payable • If you use Items to track purchases and you are not using the Accounts Payable 129

  12. Entering Bills • Select the Vendors menu and then select Enter Bills • A bill in QuickBooks tracks the amount owed to the vendor along with the details of purchase in Accounts Payable • For a bill to be considered paid by QuickBooks, you must pay it using the PayBills window 130

  13. The Unpaid Bills Detail Report • To view a list of your unpaid bills, use the Unpaid Bills Detail report • Select the Reportsmenu, select Vendors & Payables, and then select Unpaid Bills Detail 133

  14. Paying Bills • QuickBooks keeps track of all your bills in the Accounts Payable account • When you pay your bills using Pay Bills function, the balance in Accounts Payable is reduced • To use Pay Bills function: • Select the Vendors menu and then select Pay Bills 133

  15. Paying Bills Options Show Bills Discount and Credits Amt to Pay Payment Method 134

  16. Printer Setup • Select the Filemenu and then select Printer Setup • Select the FormName from the drop-down list • Select the type of printer and checks you have (voucher checks are most common) • Order preprinted checks from Intuit or from another vendor that supplies QuickBooks-compatible checks 138

  17. Printing Checks • You can print checks either individually or all together in a batch: • As you write checks and pay bills, use To be Printed status • Select the Filemenu, select Print Forms, and then select Checks • Verify the Checking account on which the checks are written • Set the number of the first check you put in the printer • Select the checks to be printed, QuickBooks assigns check numbers when it prints checks • Click Print when you’re ready to print • When QuickBooks has finished printing the checks you’ll see the Did check(s) print OK? message 139

  18. Voiding Checks • Voiding checks retain a record of these checks, and prevent gaps in your check number sequence • To void a check: • Open the Checking account register and then select check to be voided • Select the Edit menu and then select Void Check • When you void a check, QuickBooks changes the amount to zero, enters “VOID” in the memo field, and marks the check cleared • Click Record to save your change 138 142

  19. Tracking Loans using the Loan Manager • Set up a Loan to automatically amortize and track the details of each loan: • From the Banking Navigator, click the LoanManager icon • In the Loan Manager window, click Add a loan • Make Loan Payments: • Select the loanin the Loan List • Click Set Up Payment to make a payment • Confirm that Regular payment is selected • Select Write a check and click OK 145

  20. Creating Vendor Credits • Select Vendors menu and then select Enter Bills • Vendor credits are recorded in the EnterBills window using the Credit radio button • Discount window can also be used to record vendor credits, but has several disadvantages: • Reference numbers or memos • Allocation of the credit to multiple accounts. • Allocation to customers or jobs • The use of Items. • Apply the credit to one of your unpaid bills for the vendor 151

  21. Applying Vendor Credits • Select the Vendors menu and then select Pay Bills • Enter date in the Due on or beforefield • Verify information in the PaymentAccountfield, the Payment Methodfield and the Payment Datefield • Click in the checkmark (√) column to the far left of the bill and then click the Set Credits button • On the Discounts and Credits window, select the credits to be applied to the bill • If you want to apply the credit without paying the bill, reduce the Amt. To Pay column to zero. • Click Pay & Closeto pay the bill using the vendor credits 153

  22. Handling Deposits and Refunds from Vendors • Vendor Deposits • Using Accounts Payable • Vendor Refunds • Using Accounts Payable • Vendor Refunds • Directly Expensing Payment 155

  23. Vendor Deposits – Using Accounts Payable • For Vendor Deposits: • Select the Banking menu and then select Write Checks • Code the check to Accounts Payable • This creates a credit for the vendor that can be applied to the bill when it arrives • You only code checks to A/P when you are sending deposits to a vendor prior to receiving the bill 155

  24. Vendor Refunds - Using Accounts Payable • To enter a refund from a vendor will depend on how the vendor was originally paid • If the vendor was prepaid and the amount of the prepayment was morethan the bill • Accounts Payable account will have a negative (debit) balance for that vendor • In this case, apply the refund check from the vendor to this credit balance in Accounts Payable • If a check was written to the vendor and coded the check to an expense account • reduce the expense by the amount of the refund 156

  25. Vendor Refunds - Directly Expensing Payment • If you did not use the Accounts Payable features, but instead wrote a check to the vendor and coded the check to an expense account: • Record the refund using a deposit transaction • Use the same expense account you used on the original payment to the vendor 161

  26. Tracking Petty Cash • Set up a separate bank account called Petty Cash • Petty cash is used to track cash used for minor expenditures, such as office supplies, postage etc. • To make a deposit to a petty cash account, simply write a check in regular account and code the check to the Petty Cash account • When cash is used for a company expense, enter the transaction in the Payment column of the Petty Cash account register: • Each cash transaction in can be coded to the appropriate payee, account, class and job • Each cash transaction can be split among multiple accounts 161

  27. Tracking Company Credit Cards • Set up a separate credit card account in QuickBooks for each card • Enter each charge individually using the Enter Credit Card Charges window: • Select the Banking menu • Select Record Credit Card Charges • Select Enter Credit Card Charges • To pay the credit card bill, use Write Checks and code the check to the credit card account 162

  28. A/P Reports • Vendor Balance Detail: • Shows the detail of each Bill and Bill Payment to each vendor for transactions that “go through” Accounts Payable • Select the Reports menu, select Vendors & Payables, and then select Vendor Balance Detail • Transaction List by Vendor: • Shows all transactions associated with vendors, even if the transactions did not “go through” Accounts Payable • Select the Reports menu, then select Vendors & Payables, and then select Transaction List by Vendor • To print the report, click Print at the top of the report 166

  29. Summary of Key Points • Set up vendors in the Vendor list • Understand how to use classes in QuickBooks • Use QuickBooks for job costing • Enter expense transactions in several different ways • Manage Accounts Payable transactions • Print checks 168

  30. Summary of Key Points (contd.) • Void Checks • Track Loans using the QuickBooks Loan Manager • Create and apply vendor credits • Handle deposits and refunds from Vendors • Track petty cash • Track credit card charges and payments • Create reports about vendor transactions 168