Managing Expenses

Managing Expenses

Chapter 3

PAGE REF # CHAPTER 3: Managing Expenses SLIDE # 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

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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


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

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Business Transaction

Cash Vendors Credit VendorsQuickBook

s Transactio

n

Accounting Entry

QuickBooks

Transaction

Accounting Entry

Recording a Purchase Order

Not Usually Used

Non-posting entry used to

record Purchase Orders.

Recording a Bill from a Vendor

Not Usually Used

Increase (debit)

Expenses, Increase (credit)

Accounts Payable.

Paying BillsIncrease (debit)

Expense, Decrease (credit)

Checking.

Decrease (debit)

Accounts Payable, Decrease

(credit) the Checking Account.

Steps for Entering Expenses

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Setting up Vendors

• Vendors include everyone from whom you purchase products or services

• Select the Lists menu, and then select Vendor List; or, click Vendors on the Vendor Navigator

• When your vendor is also your customer, the customer name must be slightly different from the vendor name

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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 breakdown of 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

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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

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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:1. Manually write a check and then record the transaction

in a QuickBooks account register2. Use the Write Checks window to write and print

checks3. Use the Enter Bills window to record Accounts

Payable and then use the Pay Bills window to pay the bill

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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

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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


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 Pay Bills window

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The Unpaid Bills Detail Report

• To view a list of your unpaid bills, use the Unpaid Bills Detail report

• Select the Reports menu, select Vendors & Payables, and then select Unpaid Bills Detail

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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

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Paying Bills OptionsShow Bills

Discount and Credits

Payment Method

Amt to Pay

134


Printer Setup• Select the File menu and then select

Printer Setup• Select the Form Name 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

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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 File menu, 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

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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 change138

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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 Loan

Manager icon– In the Loan Manager window, click Add a loan

• Make Loan Payments:– Select the loan in the Loan List – Click Set Up Payment to make a payment– Confirm that Regular payment is selected– Select Write a check and click OK

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Creating Vendor Credits• Select Vendors menu and then select Enter Bills• Vendor credits are recorded in the Enter Bills 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

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Applying Vendor Credits• Select the Vendors menu and then select Pay Bills• Enter date in the Due on or before field• Verify information in the Payment Account field, the

Payment Method field and the Payment Date field• 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 & Close to pay the bill using the vendor credits

153


Handling Deposits and Refunds from Vendors

• Vendor Deposits– Using Accounts Payable

• Vendor Refunds– Using Accounts Payable

• Vendor Refunds – Directly Expensing Payment

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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


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 more than 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

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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

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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


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

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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


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


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

Documents

Managing Expenses