class tracking

QuickBooks 2011 Coming By September 17th

Chief Mechanic · September 16, 2010 ·

Intuit announced last night that QuickBooks 2011 and Enterprise Solutions 11.0 will be available by September 17, 2010, including via electronic download from our Buy QuickBooks page.

On tap for 2011 are:

A new Collections Center to make it easy to send overdue invoices to customers via email
Support for batch invoicing
Balance sheets by class – Intuit might have finally addressed the lack of support for fund accounting
Multi-instance capability in Premier Accountant Edition, allowing 2 company files from the same version open at the same time
A separate File Manager utility that can help firms running multiple QuickBooks files across multiple versions
Subtle improvements across multiple features accessed in everyday use
A variety of changes to Intuit services

New features have been added selectively to the different QuickBooks products, so check out our updated article describing the feature differences between Pro and Premier.

As with any new version, it will take some time for firms to change operating procedures to take advantage of the new features. For example, while the addition of a Balance Sheet By Class report will solve many business problems, it will trigger a lot of future posts in our KnowledgeBase describing how to use this feature because debits and credits will have to be balanced by class – something QuickBooks users haven’t confronted before QuickBooks 2011.

Here’s an overview of the new File Manager:

Some of the subtle improvements include:

the addition of a Customer tab to the Company Snapshot, showing (among other things) 2 key metrics: length of time as a customer and average days to pay
the addition of a History tab to important windows, such as Enter Bills, Create Invoices, and Create Credit Memos/Refunds; the History tab can be quickly opened and closed, and shows a Summary, Recent Transactions, and Notes for the vendor or customer

Tweaks such as the added History tabs make it easy to get around QuickBooks in fewer keystrokes in less time. That drives productivity improvements in busy offices – and can help make the cost of upgrading a good investment.

Over the next few weeks, kook for more articles on the new QuickBooks 2011 in our KnowledgeBase.

It’s premature to say whether these changes make QuickBooks 2011 a worthwhile upgrade. This upgrade is definitely not like the introduction of QuickBooks 2009, which added a major new feature in the form of support for multi-currency. However, with each passing year and the addition of new features, QuickBooks becomes a more mature product, so there are fewer “blockbuster” features available to add.

Still, it is unfortunate that Intuit has decided to pursue some short-sighted ways to add revenue. For 2011, there are a variety of small fees, such as the $4.99 fee to revise a previously saved form design. They’ve also made changes to the QuickBooks Pro product, such as limiting it to a maximum of 3 users, which can effectively force upgraders to purchase the more expensive QuickBooks Premier.

The market reaction to higher costs without eye-popping new features is likely to be a yawn.

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How Do I Choose the Adjustment Account When Adjusting Inventory Quanity or Value On Hand?

Chief Mechanic · September 11, 2010 ·

The adjustment account you choose depends on why you need to adjust inventory and how much detail you want in your GL.

Quantity adjustments can occur as a result of several common business situations, such as theft or discovery of damaged goods that have become unsaleable. If you want a great deal of detail in your GL, you can create adjustment accounts for each type of adjustment.

Typically, the adjustment account you enter will be an expense account for negative adjustments; for positive adjustments, you may want to choose an income account. Unless your general ledger has different accounts for different types of inventory variances, such as defects and shortages, we recommend assigning all inventory adjustments to the same GL account to provide for consistent reporting and to simplify tracking transactions.

In the screen shot below, we’ve selected GL account # 69000, Miscellaneous expenses. However, this account selection won’t provide much detail to allow us to manage inventory adjustments at the financial statement level. If your inventory adjustments are frequent enough or material enough, you may want to create a separate expense account for inventory adjustments. For even more detail, that account could have multiple sub-accounts. Adjustments would be recorded to these sub-accounts based on why inventory was adjusted.

QuickBooks Premier 2009 Inventory Adjustment for Quantity On Hand

When you enter a negative quantity adjustment, the inventory asset account (shown on the Edit Item window) for the item you are adjusting is credited (i. e., decreased), and the expense account that you entered as the adjustment account is debited (i. e., increased). For positive adjustments, the debits and credits are reversed. Both Profit & Loss and Balance Sheet accounts are affected by inventory adjustments.

In QuickBooks, while the Adjust Quantity/Value on Hand window is selected, you can press Ctrl + Y to display the Transaction Journal of the debits and credits entered.

QuickBooks Premier 2009 Transaction Journal Negative Inventory Quantity Adjustment

Keep in mind that for each adjustment, you can choose only 1 adjustment account or enter 1 memo. You can also enter a Customer:Job or Class. Therefore, you’ll need to group your adjustments based on why you’re making the adjustment.

The debits and credits of value adjustments behave the same as quantity adjustments. Typically, there’s a different reason for a value adjustment. The most common is discovery of a value impairment. In other words, the firm still has the same quantity of an item on hand, but because of changed market conditions or the passage of time, the value of those units has declined. Switching from the default quantity adjustment to a value adjustment is accomplished by checking the Value Adjustment checkbox in the lower left of the Adjust Quantity/Value on Hand window.

Quantity adjustments to fix on hand levels that have become negative are a special circumstance of inventory adjustments. Because QuickBooks uses the average cost method, the impact on accounts from allowing inventory levels to go negative can be far reaching. To gain a better understanding of the impact, read our blog post on the subject.

(+2 rating, 2 votes)

Does QuickBooks Support True Fund Accounting?

Chief Mechanic · September 10, 2010 ·

Out of the box, QuickBooks doesn’t completely support true fund accounting, but there are several simple, low cost ways to provide fund accounting in QuickBooks.

Fund accounting is a method of accounting used by public sector (e. g., cities and towns) and non-profit organizations because these entities have a need to track balances and expenditures across multiple purposes, or funds. Money is normally appropriated to a purpose at the start of a fiscal year, and expenditures are made against the available balance for that particular purpose or fund over the course of time. As a result, public sector and non-profit entities have a need to produce balance sheets and income statements for each fund as well as the overall entity. In contrast, a for-profit business produces a balance sheet and income statement for the overall entity but doesn’t have the need to produce balance sheets for groups within the overall business, such as individual departments.

Support for fund accounting in QuickBooks consists of 2 needs:

Preparing an income statement for each fund
Preparing a balance sheet for each fund

The first need, preparing a fund income statement, is easily handled by QuickBooks through the use of classes. Classes are a tool to track 1 aspect of an entity’s finances and are managed on the Lists->Class List menu selection. Generally speaking, simply creating a class for each fund and assigning a class to all transactions solves the need to track income and expenditures across funds. See our article for more information on the role of class tracking.

Where QuickBooks out of the box falls short in supporting fund accounting is in fulfilling the second need – preparing a balance sheet for each fund. There are 2 ways to address the need for fund balance reporting:

Use a third-party add-on
Track fund balances in a separate program, such as Excel

Because of the popularity of QuickBooks, third-party developers have produced a variety of tools to add features and capabilities to the program. Intuit maintains a list of many of these add-ons on the Intuit Marketplace. For QuickBooks, there are several add-ons listed in the Fund Accounting category. One add-on, FundsFix by Qfix Software Llc, addresses the need to produce a balance sheet for a fund. Based on the user comments reported on the Intuit Marketplace, this add-on has been well-received.

Another approach is to use a separate program such as Microsoft Excel to track fund balances. Normally, a spreadsheet would consist of the opening fund balance at the start of the fiscal year with additional columns for the year-to-date expenditures manually entered from a QuickBooks report and the calculated remaining fund balance. For simple fund accounting needs, this approach is workable. However, given the availability of a very low-cost add-on to address this need, it’s an approach that is only suitable for the simplest fund accounting requirement.

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Does QuickBooks Have Limits On the Number of List Items and Transactions That Can Be Entered?

Chief Mechanic · August 26, 2010 ·

Yes. There are 2 kinds of limits: physical and practical. Let’s consider each in turn.

QuickBooks faces these physical limits:

2 billion transactions
10,000 accounts in the GL chart of accounts
14,500 names (customers, vendors, employees, and other names – combined)
14,500 items (which include inventory items)
10,000 classes
100 price levels

The above list highlights the most important physical limits of QuickBooks; it’s not an all-inclusive list. The physical limits of Enterprise Solutions are considerably higher. For details on all of the physical limits of both QuickBooks and Enterprise Solutions, consult this Intuit knowledge base article.

To find out how your own company file stands relative to these limits, press F2 from within QuickBooks to display the Product Information window. On the right side, you’ll see the List Information. In this example, the company file has 134 (out of 10,000) GL accounts, 217 (out of 14,500) total names, and 106 (out of 14,500) Items.

QuickBooks Premier 2009 Product Information List Information

There are important practical considerations as well. According to Intuit, QuickBooks is designed for small businesses with fewer than 20 employees and $2 million in annual revenue. However, those are general guidelines. Bigger firms reliably use QuickBooks. What impacts whether you should use QuickBooks or its more powerful relative, Enterprise Solutions, is the size of your data file today and how that data is expected to grow over the time period for which you want to keep all transaction data in 1 file.

Intuit suggests estimating 2 Kb per transaction and projecting the size of your data file over several years. Keep in mind that a sale paid for with 1 check results in 3 transactions (invoice, payment, and deposit), and each AP transaction results in at least 2 (vendor bill and payment). This estimate does not include the data that list elements themselves (e. g., customers, vendors, or items) will add to overall file size.

In our experience, the performance of QuickBooks can degrade if overall company file size exceeds 100 Mb. Intuit suggests a practical limit of growth of 15 Mb per year (or about 7500 transactions).

As a company grows, QuickBooks includes a utility to remove fully paid and reconciled transactions in a process referred to as “cleaning up.” This process reduces the size of the QuickBooks company file. That’s why it’s important to consider the time period you’ll keep old transaction data in your company file. If you’ll clean up your company file every 18-24 months, the number of transactions you can store without hitting the practical limitations of QuickBooks will be considerably greater.

Some longtime QuickBooks users engage in a process of making a backup copy of a company file and then cleaning it up with a cutoff date. The backup copy preserves history transactions for those rare instances where they may be useful, but the company file for everyday use has been cleaned up and no longer includes stale, fully paid transactions. That results in improved performance.

The guidelines on practical limits we’ve discussed here aren’t unbreakable rules, and the limits are influenced by factors we didn’t mention, most notably the hardware performance of the computer on which you run QuickBooks.

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What Is Class Tracking and How Do I Enable It?

Chief Mechanic · April 4, 2010 ·

A class in QuickBooks is a single-purpose tool to classify income and expense transactions. Class tracking is not used for balance sheet accounts. It’s also not a way to group customers, jobs, or vendors. To do that, use a Type, which can be managed on the Lists->Customer & Vendor Profile Lists menu selection.

To use class tracking, it first must be enabled on the Accounting sub-menu of the Company Preferences tab on the Edit->Preferences menu selection; just check the box for Use class tracking. To have QuickBooks request the appropriate class for a transaction, check the box for Prompt to assign classes.

Keep in mind that class tracking is a single purpose tool – it can’t be used to track unrelated aspects of your business. Proper use of classes depends largely on your business reporting needs. Classes can be used to track:

locations
product lines or service types
partners in a professional services firm
funds for a public sector or non-profit enterprise

Since classes can be applied to both income and expense transactions, class tracking enables producing a Profit & Loss statement for each class.

QuickBooks supports sub-classes, or nested classes, up to 5 levels deep.

If you use class tracking, you’ll want to:

carefully consider your reporting requirements before you use class tracking
assign classes to both income and expenses
create a “miscellaneous” or “other” class to classify transactions that don’t fit another, more specific class
consistently assign a class to all transactions so that your class-level reports are accurate
create an “unclassified” class for transactions not yet classified – QuickBooks reporting won’t allow you to filter for transactions that have no class assigned

To manage your classes, click on the Lists->Class List menu selection.

(+2 rating, 10 votes)

class tracking

Accounting

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Intuit