QuickBooks - The DMC Opinion

QuickBooks: The DMC Opinion, by Doris Cahill, CPA and President of DMC Accounting + Technology, Ltd, Originally Published in the Massachusetts CPA Review

We have anxiously awaited the new release of QuickBooks, the bookkeeping version of Intuit’s Quicken product line. Intuit brings to market two comprehensive accrual features, invoicing with accounts receivable, and the vouchering of accounts payable. Additionally, project/job tracking was attempted in this release.

Comments will focus on QuickBooks functionality and practical application in small businesses. QuickBooks follows in the footsteps of its parent software Quicken. Double entry bookkeeping results from the seemingly transparent single sided entry of checks, invoices and vouchers. Thus, the happy accountant receives an organized trial balance at year end and the happy client effortlessly learns an accounting software and keeps their checkbook in balance. With easy pull-down menus, QuickBooks makes routine the most basic of accounting tasks: check writing, invoice typing and vouchering vendor bills. Small business’ receive up-to-date reports for accounts receivables, payables and cash. Extensive training and set up is not necessary (QuickTrainer is on-line for help). Additionally, the periodic posting of journal entries required in most other accounting systems is not needed. QuickBooks transaction report, the general ledger equivalent, immediately reflects all entries based on the user selected dates. The optimum results with QuickBooks are achieved by the user relinquishing manual checks, working with the provided invoice formats and implementing strict data entry controls.

Chart of accounts, vendor, customer, employee, inventory and service lists are provided for quick set-up. However, project lists are custom and no standard is provided. Most lists may be easily accessed and edited for data entry when processing transactions.

Project expense/income tracking is provided in the checkbook, accounts receivable and payable portion of QuickBooks. Standard job cost reports provide accrual cost activity for drafting bills or profit tracking. Projects and sub-projects may be reassigned and/or combined for those sophisticated users who make good backups. Multiple job costing on timesheets is not available in the payroll add-in known as QuickPay.

Invoicing provides many options, but is not integrated with inventory, time and billing or job expenses. Project tracking reports would act as a billing guide only. Some notable features are: the line item handling of multi-state sales tax, subtotaling, discounting, payment terms and predefined shipping, inventory, and service items. All line items calculations are automatic, but there is a built in calculator with a paste function. The invoice text editor is fair to average for ease of use and invoice formats are not highly flexible. Balance forward and specific invoice are available payment methods in accounts receivable. Credit memos can be refunded or applied and misapplied payments may be corrected. Cash, check and credit card payments received may be handled separately. The aged receivable report is flexible for age ranges, but is date sensitive and could be misleading without appropriate accounting controls. Also, a reminder pops up for undeposited receipts.

The checkbook feature has been modified to handle the interaction with the receivable payments and accounts payable checks. Daily cash receipt entries are tick marked and combined for deposit. Credit card deposits can be separated from check payments. Multiple cash accounts (i.e. payroll and regular) can be used for receiving deposits or check writing for accounts payable.

Accounts payable has some limitations if you’re going to attempt job costing. Each voucher will only cost up to 31 lines when entering a vendor bill or paycheck. This may be accommodated by subtotaling similar charges. The data entry screen resembles a checkbook register, so most non accountant types will not shy away. The aging accounts payable report helps manage cash flows, if daily entries are made and Bizminder reminds you when a payment is due.

Balance sheet accounting for receivables and payables is not a new feature from Intuit. Quicken has offered balance sheet accounting for several versions. However, some accounting knowledge was necessary in pulling together meaningful reports. Various gyrations of Quicken payee, class, and/or memo fields were required for tracking jobs, accounts receivables and accounts payables. QuickBooks provides a more workable solution for small businesses.

QuickBooks should be looked at with some caution. The ability to change and delete transactions is a significant audit concern. Reversing entries are described in the manual but can be easily averted in practice. For instance, although there is no formal closing of periods, historical records should and can be closed out to prevent change and password protection can be implemented to limit deletion of transactions by a non-owner. Note, password protection needs periodic updating due to date sensitivity.

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