Company File
Setup and
Maintenance
Chapter 6
Objectives
• Use the EasyStep Interview
• Adjust Customer and Vendor Balances after
using the EasyStep Interview
• Perform a Complete Company File Setup – The
12-step process
• Choose a Start Date
• Create the QuickBooks Company File
• Set up QuickBooks Lists
• Gather Your Information for Setting up Opening
Balances
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 2
2
Objectives (contd.)
• Enter Opening Balances
• Enter Year-to-Date Income and Expenses
• Adjust the Opening Balance for Sales Tax
Payable
• Adjust Inventory for Physical Quantities on Hand
• Verify your Opening Balances
• Close Opening Balance Equity into Retained
Earnings
• Back up the File and Setting the Closing Date
• Set up Users and Passwords
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 3
3
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 4
4
Launching the EasyStep
Interview
• The EasyStep Interview feature walks you
through the setup of a company file
• Select the File menu and then select New
Company:
– The EasyStep Interview window appears
– To navigate click Next or Prev
– To exit the Interview and retain all changes,
click Leave
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 5
5
Entering Opening Balances in
the EasyStep Interview
• The following problems result from entering
opening balances during the EasyStep
Interview:
– QuickBooks posts the opening balances to accounts
called Uncategorized Income and Uncategorized
Expenses
• It is best not to enter Opening Balances for
customers using the EasyStep Interview
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 6
6
Adjusting Customer Opening
Balances
• Each customer for whom you entered an
opening balance will have an Invoice that
you must either edit or replace:
– Edit the Item column to indicate the Items that
you sold on the Invoice
– Also, change the date to the original Invoice
date and enter the Invoice number of the
original Invoice
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 7
7
Adjusting Vendor Opening
Balances
• Each vendor for whom you entered an
opening balance will have a Bill that you
must either edit or replace
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 8
8
12-Step Process
1. Choose a QuickBooks start date
2. Create a new QuickBooks company file and configure
your preferences
3. Set up your Chart of Accounts, company lists
4. Enter opening balances for Balance Sheet accounts
(except Accounts Receivable, Accounts Payable,
Inventory, Sales Tax Payable, and Retained Earnings
5. Enter outstanding transactions including Checks,
Deposits, open Invoices, and unpaid Bills as of the start
date
6. If you are setting up mid-year, enter your year-to-date
income and expenses
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 9
9
12-Step Process (contd.)
7. Adjust Sales Tax Payable
8. Adjust Inventory to match your physical counts (page 5)
and set up Fixed Assets
9. Set up payroll lists and year-to-date payroll information
10. Verify that your Trial Balance report matches your
accountant’s Trial Balance on your start date
11. Close the Opening Balance Equity account into
Retained Earnings
12. Back up your company file and set the Closing Date
and the Closing Date Password to lock the file as of
your start date
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 10 10
Choosing a Start Date: Step 1
• Your start date is the day before you start using
QuickBooks to track your daily transactions
• It is also the date for which you have complete
information for your opening balances
• Best start dates:
– Calendar-Year Basis
• December 31
– Fiscal Year basis
• Last day of fiscal year
– For a new company
• First day of the business
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 11 11
Creating the Company File:
Step 2
• Launch QuickBooks
• Select the File menu and then select New Company
• Click Next on the first three windows of the EasyStep
Interview
• On the fourth window of the EasyStep Interview, click
Skip Interview
• Enter your company information and click Next
• Select the Company type and then click Next
• Enter the file name and location where you want to save
your company file, click Save
• It will create your company file with extension .QBW
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 12 12
Setting Up the Chart of
Accounts: Step 3
• To set up the Chart of Accounts, you will use the
following:
–
–
–
–
–
–
–
Account Types
Activating Account Numbers
Adding Accounts
Adding Subaccounts
Removing Accounts from the Chart of Accounts
Turning Off Account Numbers
Reordering the Account List
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 13 13
Account Types
• Assets:
–
–
–
–
–
Bank
Accounts Receivable
Other Current Asset
Fixed Asset
Other Asset
• Liabilities:
–
–
–
–
Accounts Payable
Credit Card
Other Current Liability
Long Term Liability
PAGE REF # 295
• Equity
• Income:
– Income
– Other Income
• Expenses:
– Expense
– Other Expense
– Cost of Goods Sold
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 14 14
Activating Account Numbers
• Select the Edit menu and then select
Preferences
• On the Preferences window, click on the
Accounting icon, and select the Company
Preferences tab
• Then check the Use account numbers
box and click OK
• QuickBooks does not require account
numbers
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 15 15
Adding Accounts
• Select the Lists menu
and then select Chart
of Accounts
• Select the Account
menu at the bottom of
the Chart of Accounts
window and then
select New
• Select account type
and enter the name
etc.
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 16 16
Adding Subaccounts
• If you want more
detail in your Chart of
Accounts, you can
add Subaccounts
• In the New Account
window check the
Subaccount of field
and select the main
account from the
drop-down list
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 17 17
Removing Accounts from the
Chart of Accounts
• Following options are available in QuickBooks to
delete accounts:
– Deleting Accounts - Option 1
– Deactivating Accounts - Option 2
– Merging Accounts - Option 3
• QuickBooks will not allow you to delete an
account if you have used the account in an Item
record or transaction
• If this is the case, use either Option 2 or Option
3 to remove the account from view in the Chart
of Accounts
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 18 18
Deleting Accounts – Option 1
• Select the account in the Chart of Accounts list
• Select the Account menu at the bottom of the
Chart of Accounts window and select Delete or
press CTRL+D
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 19 19
Deactivating Accounts –
Option 2
• If you cannot delete an account, you can
deactivate it which will cause it to disappear
from the Chart of Accounts and reduce the
clutter:
– Select the account in the Chart of Accounts.
– Select the Account button and then select Make
Inactive from the menu
• You can still see the account in historical
transactions and reports
• To view all accounts, including the inactive
accounts, click Show All
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 20 20
Merging Accounts – Option 3
• When you merge two accounts, QuickBooks edits each
transaction from the merging account so that it posts to
the merged (combined) account
• For example, if you merge the Entertainment account
into the Meals account:
– QuickBooks will edit each transaction that posts to
Entertainment, making it post to Meals instead
– Then QuickBooks will remove the Entertainment account from
the Chart of Accounts list
• Merging Cannot be Undone
• Once you merge accounts together, there is no way to
find out which account the old transactions used (except
by reviewing from a backup file)
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 21 21
Reordering the Account List
• You can sort the Chart of Accounts list by the
account name or number, by the (online
status), or by the balance amount:
– When account numbers are inactive and you click the
Name header, QuickBooks sorts the account list
alphabetically by account name
– When account numbers are active and you click the
Name header, QuickBooks sorts the list by account
number
– Click the other headers to sort by (Online status),
Type, or Balance
PAGE REF # 302
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 22 22
Setting Up Opening Balances:
Step 4
• Gathering Your Information
• Entering the Opening Balances
• Understanding Opening Balance Equity
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 23 23
Gathering Your Information
•
•
•
•
•
•
•
•
•
•
Trial Balance for your start date
Bank Statements (all accounts)
Outstanding Checks and Deposits
Open Invoices
Unpaid Bills
Employee List and W-4 Information
Payroll Liabilities by Item
Year-to-Date Payroll Detail by Employee
Year-to-Date Payroll Tax Deposits
Physical Inventory by Inventory Part
PAGE REF # 305
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 24 24
Entering the Opening Balances:
Step 4 (contd.)
• To enter your opening balances you’ll use one of the
three methods:
– Method 1: Directly Editing the Account
– Method 2: Adding a Transaction Directly in Registers
– Method 3: Using a General Journal Entry to Record Opening
Balances
• The method you use will depend on three factors:
– How familiar you are with accounting
– Whether or not the account you’re editing has transactions
– Whether you intend to use the Bank Reconciliation feature to
reconcile your accounts
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 25 25
Method 1: Directly Editing the
Account
• Use this method if you’re less familiar with
accounting
• Editing each account from the Chart of Accounts
is the simplest way to enter opening balances for
your Balance Sheet accounts:
– Display the Chart of Accounts
– Select the Bank account
– Select the Account menu at the bottom of the list and
then select Edit
– Enter the amount in the Opening Balance field
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 26 26
Method 2: Adding a Transaction
in Registers
• Use this method if the account already has
transactions
• you will need to enter a transaction directly in the
register for the account:
– Display the Chart of Accounts
– Double-click the account in which you want to enter
an opening balance
– Enter a new transaction at the bottom of the register
to record the opening balance using the start date
and coding the entry to the Opening Bal Equity
account
– Click Record to save the entry
PAGE REF # 311
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 27 27
Method 3: Using a General
Journal Entry
• Use this method if you’re familiar with using Journal
Entries and if you understand debits and credits:
– Select the Banking menu and then select Make General
Journal Entries
– Fill in the Make General Journal Entries window
• You can use a General Journal Entry to record some, but
not all, of your opening balances
• On the top line of each General Journal Entry, use an
account called Journal Entries:
– Use the Bank account type when setting up this account in your
Chart of Accounts
– The Journal Entries account will never have a balance, so it will
never show on financial statements
– It will have a register where you’ll be able to look at all of your
General Journal Entries
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 28 28
Understanding Opening Balance
Equity
• This account, which is created automatically by
QuickBooks is affected by each of the opening
balance transactions entered into QuickBooks
• As the opening balances for assets and liabilities
are entered, QuickBooks automatically adds
offsetting amounts in the Opening Bal Equity
account
• Then, after all of the opening balances are
entered, Opening Bal Equity will be “closed” into
Retained Earnings (or Owner’s Equity).
PAGE REF # 314
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 29 29
Entering Open Items: Step 5
• You must enter all the outstanding
transactions using the original dates:
– Outstanding Checks and Deposits
– Open Bills (Accounts Payable)
– Open Invoices (Accounts Receivable)
– Open Purchase Orders
– Open Estimates and Sales Orders
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 30 30
Entering Year-to-Date Income
and Expenses: Step 6
• If your start date is not at the beginning of
the fiscal year, use a General Journal
Entry to enter your year-to-date income
and expenses
• The entry allows you to summarize the
total income and expenses for the first few
months of the year
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 31 31
Adjusting Opening Balance for
Sales Tax Payable: Step 7
• Open the Sales Tax Payable register
• There will be entries for each of the open
Invoices you entered, this is your uncollected tax
• The total Sales Tax Liability is a combination of
the collected tax and the uncollected tax
• You will need to subtract the current balance in
the account (the uncollected tax) from the
amount shown on Trial Balance from your
accountant to arrive at the unpaid collected tax
• Then create a Sales Tax Adjustment for this
difference
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 32 32
Adjusting Sales Tax Payable
TotalTaxDu e  CollectedT ax  Uncollecte dTax
CollectedT ax  AmountsAlr eadyCollec tedButNotP aid
Uncollecte dTax  TaxOnOpenI nvoices
...therefo re
Adjustment Amount  Collectedt ax  TotalTaxDu e  Uncollecte dTax
PAGE REF # 320
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 33 33
Adjusting Inventory, Set up Fixed
Assets: Step 8
• If you have inventory:
– You will need to create an inventory adjustment to adjust the
actual quantity and value on hand as of your start date
– This is done after you enter your outstanding Bills and Invoices,
so that the actual inventory counts and costs will be accurate
even if some of the Bills and/or Invoices include Inventory Items
• Setting up Fixed Assets:
– If you have QuickBooks Pro or Premier, you can track detailed
information about your company’s Fixed Assets
• Setting up Loans:
– If you have QuickBooks Pro or Premier, you can track detailed
information about your loans
PAGE REF # 321
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 34 34
Setup Payroll Information: Step 9
• Setting up payroll in QuickBooks is a
lengthy and involved process
• See QuickBooks Payroll manual in this
series for more information about setting
up the payroll feature
PAGE REF # 322
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 35 35
Verifying your Trial Balance:
Step 10
• Before you transfer the balance of
Opening Bal Equity into Retained
Earnings, make sure the account balances
in QuickBooks match your accountant’s
Trial Balance:
– Select the Reports menu, then select
Accountant & Taxes, and then select Trial
Balance
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CHAPTER 6: Company File Setup and Maintenance
SLIDE # 36 36
Closing Opening Balance:
Step 11
• Once you have compared your Trial
Balance report to your accountant’s report,
use a General Journal Entry to transfer
(close) the balance in Opening Bal Equity
into Retained Earnings:
– Select the Banking menu and then select
Make Journal Entry
PAGE REF # 324
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 37 37
Setting the Closing Date and
Backing up the File: Step 12
• Set the start date as the Closing Date to
Protect your Setup Balances
• Backing up your data is very important
part of insuring the safety of your data:
– If your computer stops working
– If your hard disk crashes
– If you find a corruption in your file
• To back up your company file:
– Select the File menu and then select Backup
PAGE REF # 326
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 38 38
Setting Up Users in the Company
File
• QuickBooks provides a feature for defining “users” of the
file:
– This feature allows the “administrator” (the owner of the file) to
set privileges for each user of the file
– Provides security and user tracking when several people have
access to the same data file
– Select the Company menu and then select Set up Users
• Each user should have a password
• When a user opens the company file, QuickBooks
requires a user name and password
• The privileges granted to that user by the administrator
determine what functions of QuickBooks they can
access
PAGE REF # 326
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 39 39
Summary of Key Points
• Use the EasyStep Interview
• Adjust Customer and Vendor Balances after
using the EasyStep Interview
• Perform a Complete Company File Setup – The
12-step process
• Choose a Start Date
• Create the QuickBooks Company File
• Set up QuickBooks Lists
• Gather Your Information for Setting up Opening
Balances
PAGE REF # 331
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 40 40
Summary of Key Points (contd.)
• Enter Opening Balances
• Enter Year-to-Date Income and Expenses
• Adjust the Opening Balance for Sales Tax
Payable
• Adjust Inventory for Physical Quantities on Hand
• Verify your Opening Balances
• Close Opening Balance Equity into Retained
Earnings
• Back up the File and Setting the Closing Date
• Set up Users and Passwords
PAGE REF # 331
CHAPTER 6: Company File Setup and Maintenance
SLIDE # 41 41