Quickbooks Learning Essay

14662 Words Dec 4th, 2013 59 Pages
A QUICKBOOKS ACCOUNTING PRIMER
By Jeanie R. Hoshor, M.S. Accounting

Introduction

Businesses run on information: information about the purchase of goods and services from their vendors, about the sale of goods and services to their customers, about their inventories of products, about their employees and the services they perform and the wages they earn, about all the things (cash, buildings, equipment, patents, supplies, etc.) they use to carry on their operations and activities. Most of this information deals with things that have a value that can be measured in dollars and cents; this is financial information. This course (OAS 120) and your textbook deal with the keeping of financial (accounting) records, using a software
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The equities record the sources of the assets: when they come from creditors, it creates creditor equity (liability); when they come from the owner or from the operation of the business which belongs to the owner, it creates owner equity. As the name Balance Sheet suggests, total assets must equal total equities.

On the next page is a sample of a Profit & Loss report done in QuickBooks (QB). The numbers on the left of the account names are account numbers. For example, 4010 is the number of the revenue account named “Web Page Design Fees.” Notice the date in the heading at the top of the report: June 2010. This report shows revenues earned and expenses incurred during the entire month of June. It does not include any revenues or expenses from any other time period. Each Profit & Loss report covers one specific period of time: one month, one quarter (three months), or one year. The fee income (revenue) shown on this report must come from services provided to customers during the month of June.

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The customers may or may not have paid us cash for these services in June; it does not matter. The revenue (income) is recognized (included on the Profit & Loss report) when it is earned. Revenue is earned by delivering goods or providing services to customers. In most cases, service is provided on credit and cash will be received later, but the revenue is earned and recognized when we do the work, not when we collect the cash.

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