How to Operate QuickBooks Part I

This article is to here to guide you through basic bookkeeping and QuickBooks.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Personal Computer
• QuickBooks 2003-2007
• An Internet Connection

1. The Chart of Accounts is based upon the Accounting Equation.
   
   The accounting equation is ASSETS=LIABILITIES(Debts)+OWNER'S EQUITY
   
   Assets are things such as Cash, Accounts Receivable(A/R), Prepaid (Always an asset), Supplies >1yr., and Equipment <1yr.
2. Liabilities(debts) are Accounts Payable(A/P), Notes Payable.
   
   Owner's Equity is Revenue, Capital(Investment), Expenses, and Withdrawals.
3. About OWNERS EQUITY:
   Revenue increases Owner's Equity
   Capital increases Owner's Equity
   Expenses decreases OE
   Withdrawals decreases OE
4. Now on to QuickBooks. (1) Launch QuickBooks. (2)Click File > Open "Sample Product Company." (3)Click Lists > Chart of Accounts. Now, play around with the Chart of Accounts by double clicking an account. This should now bring you to a transaction register where you can enter credits and debits for that account.
5. Let's try something. Let's decrease our Notes Payable debt by $200.00. Double click the Notes Payable account. Enter a date. Now choose the Great Statewide Bank. Choose Note Payable where the account drop down is. Click in the decrease slot and enter 200. Now click on Record and OK if a box pops up.
6. You must now go back to Chart of Accounts. Double click on the account in which you used to pay the Note. Ex: Savings, Bank Acct. etc. Now do the same thing you did in the Notes Payable transaction page. Date, Payee(Great Statewide Bank), Note Payable in acct. drop down, and decrease your pay acct. by $200.00. You have now balanced the accounting equation. This is because Assets were decreased and so were Liabilities so the equation will balance now.
7. Now, in order to view your P&L(Profit and Loss) Statement or Income Statement. Click on the Reports menu. Now scroll down to Company and Financial. An automatic box should appear next to that menu where you can choose a wide variety of P&L Statements. Your P&L Statement shows your Net Income which is Revenue-Expenses=Net Income. This does not include TAXES!! Remember it is Net we are calculating, not Gross Profit.

Tips & Warnings

• Accounting equation must ALWAYS balance!!
• Please see my other articles on how to operate QuickBooks!!
• This is only Part I of a series of Lessons on QuickBooks.