Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28

Chapter 2

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Designing your accounting plan

Intuit built QuickBooks with diverse capabilities for diverse operations.  Small businesses run in an endless variety of endeavors, managed by a wide spectrum of people, whose common denominator is that they are not employed by another person. QuickBooks performs a broad set of functions, and you will find most that you need.  No program is all things to all people.  QuickBooks will do all or most of what you want, but you may find you want functions that it does not have.

Success will be based on understanding QuickBooks capabilities and its limitations.  Then you can build your accounting plan for the best use of its features.  The table lists summary descriptions of the major working parts, each of which is the subject of a page or more of text in its respective chapter.



Side Effects

Balance Sheet Accounts

List assets, liabilities, and equity

Summarized in balance sheet (statement of financial position.)

Detailed in some transaction reports.

Retained Earnings is included, but has special functions, explained in Accounting chapter.

Not available in P&L and other summarizing reports.

Income and Expense Accounts

Record dynamics of business.

Transactions are summarized in P&L Report and in Custom Reports, which are modified P&L Reports.

Summarized for one year only. Results for prior years are in Retained Earnings.


Jobs are subordinate to customers; usually mentioned as Customer:Job.

New Job gets copy of current customer information, which stays as it is copied in,  unless edited within job.

Similar to a separate customer.

Payment applies to one job only, but if a payment is for multiple jobs, a workaround can be devised.

Estimates (QuickBooks Pro)

Quote a price to a customer, without recording and income

Translate to one or more invoices

Progress invoicing from estimates (beginning QuickBooks Pro 5)

Only one (1) estimate per Customer:Job.

Additional estimates require additional jobs.


Additional labels on income and expense transactions

Useful in some reports for sorting and selection of transactions to be included.

Building contractor could have expense accounts for framing, electrical, etc., and classes for different job sites.

Wont stick to transfers between balance sheet accounts. See below.

Screen width may limit use, particularly in Preview Payroll.

Turn on Use class tracking in Preferences


Started as invoice line items

Connects sales transaction to income account

Declares action to customer

Payables account uses items for purchases

Does not include Payroll Items

Payroll Items

Pay checks are generated as if the employee generated an invoice to the employer, using payroll items.

Payroll items put in earnings, take out deductions, etc.

Not included among Items on reports


Single asset account for keeping inventory

Divided into items

Every unit of an item is considered identical

Average price tracked

Income account for sales

Cost of Goods Sold account

Only average pricing may be used.

Condense Data does not delete old inventory transactions.

Balance Sheet Report

(Statement of Financial Position)

Summarizes all of balance sheet accounts, as of a certain date.

Earnings (or Current Earnings) are included, as are Prior Earnings (previous fiscal years.)


Profit and Loss Report

(Income statement)

Summarizes all income and expense transactions for current (or designated) fiscal year.

Custom Reports are essentially P&L reports, set up for modification.

Views only one year. 

Prior years are summarized in Retained Earnings.

Figures in rows and columns

Transaction Reports

List transactions in detail

Can include any accounts

Full detail, not summarized

Figures in one basic column, with subtotals and totals offset

Transaction Detail Reports

List transactions in detail

Can include any accounts


Cash Flow Reports


Not available in QuickBooks, but workarounds have been devised.

Time Accounting

In QuickBooks Pro

Employee time records for paying employees or for billing customers

Vendor time recording

QuickBooks Pro 4 and earlier can only record time worked, cant accumulate time.

Service Items must be used to bill time.

Time Accumulation

QuickBooks Pro 5 Timer

Separate from QuickBooks Pro

Run in several computers, one per employee

Easy to use

Transfer data to QuickBooks Pro 5, for pay and billing

Include income and expense accounts, through service items

Coordination between computers requires planning and organization

Understand it or make a mess

One computer accumulates time on only one activity at a time.

That is the whole book, in one table!  There is no way it can say all that you need.  Most users will skip most of the entries. One or two features will probably send you off to the relevant chapters, for details that will make a major difference to your business.

Classes are useful when income or expenses must be sliced in two different directions, such as by the type of expense and by product line.  A farmer might might set up expense accounts for plowing, seed, chemicals, harvesting and more.  Classes could be set up for wheat, alfafa, barley, or whatever. Then reports could detail costs by activity or by crop.  Costs could also be summarized in a report with columns for expense accounts, and the various crops in rows.

Classes stick only to income or expense transactions.  They do not apply to any transactions in balance sheet accounts.  For example, classes will not work with inventory items.  These are tracked by transactions in balance sheet asset accounts. When an item is sold, classes can be used on the related income and expense transactions.

There are the tools, complete with caution labels. You, and your accountant, can set up a plan to put QuickBooks to work, supporting the prosperity of your business.

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Last modified: May 21, 2004