by Williams, Johnson
| ISBN: 978-1-61853-325-8 | Copyright 2020Tabs
This book gives students an introduction to QuickBooks Online (QBO) that focuses not only on the software mechanics, but also on the basic accounting concepts that underlie all accounting systems. This book is not meant to be a user manual. Students will come away from this book with an understanding that it is their knowledge of the principles of accounting, not their data-entry skills, that is needed to be successful in business.
This 2019 update features the latest updates to QuickBooks Online.
This book is primarily intended for use in undergraduate accounting programs, although it could be used in business or computer information programs as well. It is expected that students taking this course have already successfully completed a course in financial accounting and have a firm understanding of the basic principles of accounting.
Each new copy of this book includes a full year of access to QuickBooks Online Plus. Students should refer to the insert at the front of the book, which contains instructions on accessing the complimentary cloud-based software.
With QuickBooks Online, students use their Internet browser to use the software—no installation required—and it can be used on any device with Internet access. (A high-speed Internet connection is recommended, such as DSL or cable modem. For more information go to https://community.intuit.com/articles/1145516-system-requirements-for-quickbooks-online and type in System Requirements in the search field.)
The book is designed in such a way that the accounting concepts, as well as the software mechanics, get more complex with each section. Other books focus primarily on software data entry. This book allows the students to see why events are recorded the way they are in a computerized accounting system while refreshing students’ knowledge of accounting concepts and reinforcing the accounting and journal entries behind transactions.
• Section One—Introduction
■ The first chapter introduces students to the basic structure of QuickBooks Online Plus (QBO).
■ In the second chapter, the process of creating new company files is covered.
• Section Two—Service Companies
■ The next three chapters (Chapters 3, 4, and 5) cover the sales, purchase, and end-of month cycles in a service company.
■ Students are introduced to accounting for basic transactions in a computerized environment.
• Section Three—Merchandising Companies
■ The section introduction includes a description of internal controls in QBO.
■ Chapters 6, 7, and 8 cover the sales, purchase, and end-of-month cycles in a merchandising company.
■ Students are introduced to accounting for more complex transactions in a computerized environment.
• Section Four—Beyond the Basics
■ Chapter 9 covers billing for time and expenses.
• Section Five—Paying Employees
■ Chapter 10 covers budgeting and segment reporting.
■ Chapter 11 covers a number of special tools in QBO.
■ Chapter 12 covers basic payroll functions that would be used in all types of companies (service, merchandising, and manufacturing).
The book is written clearly to aid student understanding of difficult concepts. Clear explanations of why certain procedures are used in QuickBooks Online (QBO) are supported by relevant examples and relatable end-of-chapter assignments, serving to bridge the gap between computerized accounting concepts and real-world application.
Most computerized accounting textbooks on the market approach the teaching of QuickBooks in a prescriptive manner, going through the procedures of the software while overlooking how an accountant would actually utilize the software in the real world. The book takes a practical approach and shows the student how the software is used in a business environment. In addition to the standard financial reports, students are exposed to job, segment, and variance reports.
The book’s four-color format facilitates student understanding and draws attention to the key concepts and pedagogy. Ample screenshots provide students realistic snapshots of what they will see when working in the software. A host of pedagogical elements serve as helpful illustrations, providing additional context and further concept reinforcement.
HINT boxes appear throughout to provide helpful quick tips and tricks for working more efficiently in QBO.
WARNING boxes highlight common technical pitfalls to avoid.
BEHIND THE SCENES Boxes
BEHIND THE SCENES boxes provide additional context in support of the accounting that is going on inside the computer.
When students are learning accounting application software, it’s natural for them to focus on the software mechanics and forget that they’re taking an accounting course. To help put some of their focus back on accounting, students are periodically asked a question related to material covered in the chapter. The questions are intended to remind them, either directly or indirectly, of underlying accounting concepts. The answers are included at the end of each chapter.
Appearing in red, bold font in the first instance, key terms are defined for the student in the margins of the text for a quick refresher. A comprehensive glossary is included in the back of the book.
Practice Exercises are included at the end of every section in the first ten chapters. The exercises provide students an immediate opportunity to practice the material they just learned and prepare them for completing the chapter assignments. The exercises use the QBO test drive company, a fictional company called Craig’s Landscaping and Design set up by Intuit.
The Practice Exercises can be done in class, with the instructor, or can be done by the students, on their own, as part of the lab component of a face-to-face course or in online courses. Check figures are included with the exercises to reassure students that they are recording the transactions accurately.
End-of-chapter review material includes:
• Chapter shortcuts.
• Chapter review with matching of terms to definitions and multiple choice questions that are a combination of accounting concepts and QuickBooks application questions.
• A choice of two end-of-chapter assignments featuring fictional companies that move from selling service exclusively in the early chapters to selling both services and products in the later chapters.
The assignments include check numbers for students. This allows them to focus on the process and reduces student frustration.
There are a number of additional topics that are helpful to students as they master QBO, and these have been included as end-of-chapter and end-of-book appendices. Instructors may wish to cover these topics in class or have students go over them on their own time.
Students often have a difficult time seeing any similarities between computerized accounting systems and the more manual systems they saw in their introductory financial accounting classes (the journal entries, T-accounts, and general ledgers). To help students connect the two, Appendix A (Is Computerized Accounting Really the Same as Manual Accounting?) is an accounting refresher that compares manual and computerized accounting and provides examples of how journal entries, journals, T-accounts, and trial balances show up in QBO. It also covers cash versus accrual accounting.
The book has been mapped to the 10 domains that comprise the exam objectives for the QuickBooks Certified User Exam.
What Is the QuickBooks Certified User Exam?
The Intuit® QuickBooks Certification exam is an online exam that is proctored at Certiport Authorized Testing Centers. The certification program validates QuickBooks accounting skills while providing students with credentials that demonstrate real-world abilities to prospective employers. Once passed, test takers receive an official digital certificate representing their skills in QuickBooks. A map correlating the chapter content to the Certiport domains is available to students so they can streamline their exam preparation.
myBusinessCourse is a complete, secure, web-based training and e-Learning solution. There is nothing to download or install; it is accessible through any modern web browser and most mobile devices.
|About the Authors (pg. iii)|
|Preface (pg. iv)|
|Brief Table of Contents (pg. xiii)|
|Contents (pg. xiv)|
|Section One Introduction (pg. 1-1)|
|Section Overview (pg. 1-2)|
|Chapter 1 Introduction to QuickBooks Online (QBO) (pg. 1-3)|
|A Little Background (pg. 1-4)|
|Quickbooks Online (pg. 1-5)|
|Before We Go Any Further (pg. 1-6)|
|Where To Go For Help (pg. 1-6)|
|Practice (pg. 1-6)|
|Accessing the Test Drive Company (pg. 1-7)|
|Moving Around in Quickbooks Online (pg. 1-8)|
|Accessing Tools (pg. 1-8)|
|Forms (pg. 1-13)|
|Finding Transactions (pg. 1-16)|
|Organization of Quickbooks Online (pg. 1-19)|
|The Importance of “Lists” (pg. 1-19)|
|Adding, Editing, or Deleting Accounts (pg. 1-20)|
|Other Lists in QuickBooks Online (pg. 1-24)|
|Editing a Product or Service Item (pg. 1-24)|
|Transactions in Quickbooks Online (pg. 1-26)|
|Reporting (pg. 1-27)|
|Customizing Reports (pg. 1-29)|
|Printing Reports (pg. 1-35)|
|Chapter Shortcuts (pg. 1-37)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 1-37)|
|Assignment (pg. 1-38)|
|Chapter 2 Setting Up Company Files (pg. 2-1)|
|Introduction (pg. 2-2)|
|Setting Up Company Files in QBO (pg. 2-3)|
|Setting Up Brand New Companies in QBO (pg. 2-3)|
|Converting Existing Companies to QBO (pg. 2-5)|
|Customizing QuickBooks Online (pg. 2-5)|
|Editing Settings In a Company File (pg. 2-5)|
|Setting Up Your Company File (pg. 2-9)|
|STEP 1-Decide on the email account you want to use. (pg. 2-10)|
|STEP 2-Read the background information for the homework company assigned by your instructor included (pg. 2-10)|
|STEP 3-Activate your subscription. (pg. 2-10)|
|STEP 4-Answer the informational questions that appear in the next set of screens. (pg. 2-11)|
|STEP 5-Change the settings. (pg. 2-14)|
|STEP 6-Purge the chart of accounts. (pg. 2-17)|
|STEP 7-Import a new chart of accounts. (pg. 2-19)|
|STEP 8-Import the products and services list. (This process will be similar to the import of the cha (pg. 2-21)|
|STEP 9-Import customers. (This process will be similar to the import of products and services.) (pg. 2-23)|
|STEP 10-Import vendors. (This process will be similar to the import of customers.) (pg. 2-25)|
|STEP 11-Check your balances. (pg. 2-26)|
|Chapter Shortcuts (pg. 2-27)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 2-28)|
|Assignments (pg. 2-29)|
|Appendix 2A Setting Up Your Google Gmail Account (pg. 2-46)|
|If This Is Your First Gmail Account (pg. 2-46)|
|If You Already Have a Gmail Account (pg. 2-47)|
|Chapter 3 Sales Activity (Service Company) (pg. 3-5)|
|What is the Sales Cycle in a Service Company? (pg. 3-6)|
|Setting Up Standard Sales Settings (pg. 3-6)|
|Managing Customers (pg. 3-8)|
|Customer Center Display (pg. 3-8)|
|Adding a Customer (pg. 3-10)|
|Viewing Customer Information (pg. 3-12)|
|Changing Customer Information (pg. 3-12)|
|Inactivating a Customer (pg. 3-13)|
|Managing Service Items (pg. 3-16)|
|Organizing Products and Services (pg. 3-16)|
|Adding a Service Item (pg. 3-18)|
|Editing Products and Services (pg. 3-20)|
|Setting Up Credit Terms (pg. 3-23)|
|Recording Sales Revenue (pg. 3-26)|
|Recording Sales on Account (pg. 3-27)|
|Recording Cash Sales (pg. 3-29)|
|Recording Payments from Customers (pg. 3-32)|
|Payments on Account (pg. 3-32)|
|Making Deposits (pg. 3-36)|
|Recording Customer Credits and Refunds (pg. 3-39)|
|Creating Credit Memos with Automatic Application Set as the Preference (pg. 3-40)|
|Creating Credit Memos with Manual Application (Automatic Application Preference Turned Off) (pg. 3-42)|
|Issuing Refunds to Customers (pg. 3-43)|
|Sales and Customer Reports (pg. 3-47)|
|Sales Cycle Summary (pg. 3-50)|
|Chapter Shortcuts (pg. 3-51)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 3-51)|
|Assignments (pg. 3-53)|
|Chapter 4 Purchasing Activity (Service Company) (pg. 4-1)|
|What is the Purchase Cycle in a Service Company? (pg. 4-2)|
|Managing Vendors (pg. 4-2)|
|Vendor Center Display (pg. 4-3)|
|Adding a Vendor (pg. 4-4)|
|Viewing Vendor Information (pg. 4-6)|
|Editing Vendor Information (pg. 4-6)|
|Inactivating a Vendor (pg. 4-7)|
|Recording Purchases (pg. 4-9)|
|Automation in QBO (pg. 4-9)|
|Purchasing on Account (pg. 4-11)|
|Purchasing with Cash or Check (pg. 4-14)|
|Voiding Checks (pg. 4-16)|
|Purchasing with a Credit Card (pg. 4-19)|
|Paying Vendor Balances (pg. 4-22)|
|Paying Multiple Vendor Bills (pg. 4-22)|
|Paying One or More Bills from a Single Vendor (pg. 4-24)|
|Purchases Cycle Summary (pg. 4-25)|
|Vendor Reports (pg. 4-26)|
|Chapter Shortcuts (pg. 4-27)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 4-27)|
|Assignments (pg. 4-28)|
|Appendix 4A Reporting 1099 Vendor Activity (pg. 4-36)|
|Chapter 5 End-of-Period Activity (Service Company) (pg. 5-1)|
|Before Issuing Financial Statements (pg. 5-2)|
|Reconciling Bank and Credit Card Accounts (pg. 5-3)|
|Bank Reconciliations (pg. 5-3)|
|Credit Card Reconciliations (pg. 5-8)|
|Making Adjusting Journal Entries (pg. 5-12)|
|Preparing Financial Statements (pg. 5-14)|
|Closing a Period (pg. 5-18)|
|Closing an Accounting Period (pg. 5-18)|
|Year-end Closing (pg. 5-20)|
|Chapter Shortcuts (pg. 5-21)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 5-22)|
|Assignments (pg. 5-23)|
|Appendix 5A Getting It Right (pg. 5-29)|
|Appendix 5B Understanding The Reconciliation Report (pg. 5-30)|
|Appendix 5C Fixing Reconciliation Errors (pg. 5-33)|
|Section Three Merchandising Companies (pg. 6-1)|
|Controls in QuickBooks Online (pg. 6-1)|
|Managing Users (pg. 6-1)|
|Adding Users (pg. 6-2)|
|Adding Standard Users With Limited Access (pg. 6-4)|
|Adding Accountant Users (pg. 6-7)|
|Editing, Monitoring, and Deleting Users (pg. 6-7)|
|Reporting on Transaction History (pg. 6-8)|
|Section Overview (pg. 6-8)|
|Chapter 6 Sales Activity (Merchandising Company) (pg. 6-9)|
|What is the Sales Cycle in a Merchandising Company? (pg. 6-10)|
|Managing Customers (pg. 6-10)|
|Setting Up Sub-Customers (pg. 6-10)|
|Customers and Sales Tax (pg. 6-11)|
|Setting Up Sales Taxes (pg. 6-12)|
|Managing the Tax Status of Customers (pg. 6-16)|
|Shipping Addresses (pg. 6-18)|
|Managing Items (Merchandising Company) (pg. 6-19)|
|Setting Up Inventory Items (pg. 6-19)|
|Recording Sales Revenue (pg. 6-25)|
|Customer Discounts (pg. 6-25)|
|Delayed Charges and Delayed Credits (pg. 6-29)|
|Recording Uncollectible Accounts (pg. 6-33)|
|Recording Payments From Customers (pg. 6-37)|
|Customer Payments by Credit Card (pg. 6-37)|
|Early Payment Discounts (pg. 6-40)|
|Customer Checks Returned by Bank Due to Insufficient Funds (NSF Checks) (pg. 6-43)|
|Customer Reports (pg. 6-46)|
|Customer Statements (pg. 6-48)|
|Chapter Shortcuts (pg. 6-50)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 6-50)|
|Assignments (pg. 6-51)|
|Chapter 7 Purchasing Activity (Merchandising Company) (pg. 7-1)|
|What is the Purchase Cycle in a Merchandising Company? (pg. 7-2)|
|Purchasing Inventory (pg. 7-2)|
|Paying at Time of Purchase (pg. 7-3)|
|Ordering Inventory (pg. 7-5)|
|Managing Purchase Orders (pg. 7-17)|
|Ordering Inventory Without Using the Purchase Order System (pg. 7-19)|
|Vendor Credits (pg. 7-19)|
|Entering Credits from Vendors (pg. 7-19)|
|Applying Credits from Vendors (pg. 7-20)|
|Special Considerations for Returns of Inventory (pg. 7-22)|
|Paying Vendor Balances (pg. 7-24)|
|Early Payment Discounts (pg. 7-24)|
|Vendor Reports (pg. 7-28)|
|Chapter Shortcuts (pg. 7-29)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 7-29)|
|Assignments (pg. 7-30)|
|Chapter 8 End-of-Period and Other Activity (Merchandising Company) (pg. 8-1)|
|Adjusting Inventory (pg. 8-2)|
|Managing Sales Taxes (pg. 8-6)|
|Remitting Sales Tax Liabilities (pg. 8-8)|
|Adjusting Sales Tax Liabilities (pg. 8-11)|
|Deleting Sales Tax Payments (pg. 8-13)|
|Entering Cash Receipts from Non-Customers (pg. 8-15)|
|Recording Bank Transfers (pg. 8-17)|
|Inactivating and merging general ledger accounts (pg. 8-18)|
|Inactivating an Account (pg. 8-18)|
|Merging Accounts (pg. 8-20)|
|Adding Notes to Reports (pg. 8-21)|
|Chapter Shortcuts (pg. 8-24)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 8-25)|
|Assignments (pg. 8-26)|
|Appendix 8A Downloading Bank Transactions Into QBO (pg. 8-34)|
|Setting Banking Rules (pg. 8-37)|
|Section Four Beyond the Basics (pg. 9-1)|
|Chapter 9 Project Tracking and Billing for Time and Expenses (pg. 9-3)|
|Before We Begin (pg. 9-4)|
|Setting Up Projects (pg. 9-4)|
|Setting Up Independent Contractors (pg. 9-9)|
|Using Timesheets To Track Hours (pg. 9-11)|
|Setting Up Time Tracking (pg. 9-12)|
|Entering Timesheet Data (pg. 9-12)|
|Tracking Costs Other Than Labor By Project (pg. 9-16)|
|Turning on Features for Tracking and Billing Direct Expenses (pg. 9-16)|
|Accounting for Direct Costs Billed to Customers (pg. 9-17)|
|Identifying Costs as Billable (pg. 9-20)|
|Billing for Time and Costs (pg. 9-22)|
|Preparing Project Reports (pg. 9-26)|
|Chapter Shortcuts (pg. 9-27)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 9-27)|
|Assignments (pg. 9-28)|
|Appendix 9A Working with Estimates (pg. 9-43)|
|Creating Estimates (pg. 9-43)|
|Creating Invoices from Estimates (pg. 9-45)|
|Copying Estimates (pg. 9-47)|
|Creating Purchase Orders from Estimates (pg. 9-48)|
|Chapter 10 Management Tools (pg. 10-1)|
|Tracking by Class and Location (pg. 10-2)|
|Turning on Class Tracking (pg. 10-3)|
|Turning on Location Tracking (pg. 10-5)|
|Setting Up Classes and Locations (pg. 10-6)|
|Adding Class and Location to Transactions (pg. 10-11)|
|Reporting by Class or Location (pg. 10-14)|
|Creating and Using Budgets (pg. 10-16)|
|Creating Budgets (pg. 10-17)|
|Creating Budget Reports (pg. 10-21)|
|Chapter Shortcuts (pg. 10-21)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 10-22)|
|Assignments (pg. 10-23)|
|Chapter 11 Additional Tools (pg. 11-1)|
|Reversing Entries (pg. 11-2)|
|Recurring Transactions (pg. 11-4)|
|Saving Customized Reports (pg. 11-9)|
|Creating Management Reports (pg. 11-12)|
|Creating Custom Fields (pg. 11-18)|
|Customizing Forms (pg. 11-20)|
|Using Customized Forms (pg. 11-24)|
|Exporting Reports to Excel (pg. 11-24)|
|Uploading and Managing Attachments (pg. 11-26)|
|Adding Attachments to Customer or Vendor Records (pg. 11-26)|
|Adding Attachments to Transactions (pg. 11-27)|
|Adding Attachments Directly to the Attachment Lists (pg. 11-28)|
|Chapter Shortcuts (pg. 11-31)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 11-31)|
|Assignments (pg. 11-32)|
|Section Five Paying Employees (pg. 12-1)|
|Before We Move Forward (pg. 12-1)|
|Compensation (pg. 12-1)|
|Payroll Taxes (pg. 12-2)|
|Benefits (pg. 12-2)|
|Chapter 12 Payroll Activity (pg. 12-3)|
|What is the Payroll Cycle? (pg. 12-4)|
|Payroll Plans Available In QBO (pg. 12-4)|
|Before We Start (pg. 12-4)|
|Turning On Payroll (pg. 12-5)|
|Managing Payroll Settings (pg. 12-8)|
|Setting Pay Policies (pg. 12-9)|
|Setting Up Other Deductions and Company Contributions for Payroll (pg. 12-12)|
|Setting Up Taxes (pg. 12-14)|
|Setting Accounting Preferences for Payroll (pg. 12-16)|
|Other Payroll Settings (pg. 12-19)|
|Changing Payroll Settings (pg. 12-19)|
|Managing Employees (pg. 12-21)|
|Setting Up the First Employee (pg. 12-22)|
|Setting Up Additional Employees (pg. 12-26)|
|Editing and Deleting Employees (pg. 12-29)|
|Processing Payroll (pg. 12-30)|
|Editing, Voiding, or Deleting Paychecks (pg. 12-35)|
|Processing and Reporting Payroll Taxes (pg. 12-38)|
|Remitting (Depositing) Payroll Taxes (pg. 12-38)|
|Editing Payroll Tax Liabilities (pg. 12-41)|
|Preparing Payroll Tax Forms (pg. 12-41)|
|Preparing Payroll Reports (pg. 12-41)|
|Chapter Shortcuts (pg. 12-42)|
|Chapter Review (Answers available on the publisher’s website.) (pg. 12-43)|
|Assignment (pg. 12-44)|
|Appendix A Is Computerized Accounting Really the Same as Manual Accounting? (pg. A-1)|
|Accrual and Cash Basis Accounting in Quickbooks Online (pg. A-3)|
|Comparison of Computerized and Manual Accounting Systems (pg. A-4)|
|Journal Entries (pg. A-5)|
|Journals (pg. A-6)|
|General Ledger and T-Accounts (pg. A-8)|
|Trial Balances (pg. A-8)|
|Appendix B Account Types and Common Transaction Types used in QBO (pg. B-1)|
|Appendix C Common Options Available on Various Forms (pg. C-1)|
|Glossary (pg. G-1)|
|Index (pg. I-1)|
Last Updated: Nov 26 2019
Corrections to identified errors in the the text.
QBO 2019-2020 Software Updates
Last Updated: Nov 1 2019
Includes updates to Chapters 2, 5-7, and 12.
Getting Started Instructions & Videos for Students
Last Updated: Oct 14 2019
The Getting Started download includes an overview of how to get started using QBO and instruction on how a student can request their free QBO license as well as a video from Intuit Education on how to request a student license. The files included are as follows:
*Getting Started with QBO - An overview of all the different tools and data needed to get started using and practicing with QuickBooks Online.
*Intuit Student Code Process - Instructions on how to request your free 1-year QuickBooks Online license code from Intuit Education.
*Nuts and Bolts - Student Sign-up Process Video - A short video from Intuit Education covering the sign-up process.
Math Revealed Excel Setup Files
Last Updated: Oct 14 2019
Here are the Excel setup files for Math Revealed.
Salish Software Excel Setup Files
Last Updated: Oct 14 2019
Here are the Excel setup files for Salish Software.
Certiport Mapping (Student)
Last Updated: Oct 14 2019
This document maps the objectives of QuickBooks Online Certified User exam, administered by Certiport, to their locations and coverage in the textbook.
You must have an instructor account and submit a request to access instructor materials for this book.
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