QuickBooks Pro Plus desktop 2022 company preferences accounting Get ready because we bookkeeping pros are moving up the hill top with QuickBooks Pro Plus desktop 2022. And we are on the desktop we have their software on the left hand side we created the data file get great guitars and a prior presentation opening it up by double clicking the software and then opening up the data file within it opening up get great guitars, the password is capital G G G 1234.
Don’t tell anyone else enter Okay, here we are in our get great guitars file, the homepage typically opens up automatically when we open up the company file, I’m gonna maximize that homepage to the gray area typically, then we’ll go to the View drop down select the Open Windows list listing them out on the left hand side. Normally, I will then open up the balance sheet and the income statement. But there’s no data yet. And this company file because it’s a new company file.
So what we will do instead is the first thing we want to think about is are the company preferences set up the way we want them company preferences typically being set up in Port, when we enter the data for the QuickBooks file to be set up many of the default settings for the company preferences, we’ll be fine, we will leave them as they are. But some of them we might need to change. And so we want to go through the company preferences, which can be a little bit overwhelming because there are a lot of them. But we’re going to go to the Edit drop down, we’re going to go to the copy company preferences at the bottom.
And then you’ve got all this list of items or categories of preferences on the left hand side. And then you’ll have the preferences on the right hand side, we’re going to be starting out with the accounting preferences. We’ll go through many of these just step by step and just see what your options are with regards to them. So normally, you go to the accounting on the left hand side, and then we got the two choices on the right.
My preference is company preferences, nothing currently in my preferences, so we’re going to go to the company Preferences tab up top, the main thing that you might want to consider and it’s probably best to do so when you first start the company file is do I want to use account numbers or not. So when you think about the account numbers, you’re thinking about the general ledger, and the account numbers gives you a little bit more control over it or the Chart of Accounts,
I should say, account numbers give you a little bit more control. So let me just show that for I close this back up, and we go to the lists drop down and take a look at the chart of accounts. Then we have our accounts that are set up by default, QuickBooks basically just gave us a list of accounts at least as a starting point. And then you can see they’re they’re organized not by alphabetical order.
But first and primarily by account type assets than liabilities than equity than income and expense and then further categorize down from there. Within those categories. However they are they are in alphabetical order as a default within the category as you can see here of expenses. If you would like to then have a different ordering of the categories within each of these categories like expenses, you can use account numbers to do that.
But it can be a little bit tricky to assign the account numbers because you want to make sure that you’re doing so that you in a way that you don’t kind of lock yourself in that you have enough account numbers that you can expand and add more accounts when you need to, without without getting given the account numbers to get kind of messed up. We’ll talk more about that in a future presentation or a future section we talked about account numbers just in general. But by default, they don’t have the account numbers, because they can be more complicated.
So they’re going to be off by default. We’re not going to use them here. But we do have another section going over how you might want to set them up if you would like to have a little bit more control over them. Going back to the preferences, and go into the company tab require accounts will be on by default, then we got the class Use class tracking for transactions. This is a tool that can be used for specialized type of needs. We have different courses or other courses that show how to use this tool in different formats.
For example, you might have class tracking for different departments that you want to be tracking. If you turn on the class tracking, it does take a little bit more data input to input information into the forums. But once you have that, then you can print forms that will be broken out in essence by class you can think of for example, a Profit and Loss report that then has this Profit Loss report in one column, and then two columns broken out for it that can assign by class as we enter the transactions.
So if you were to turn class, let’s close this out just for an example. And I go to the homepage and we then go to our invoice here turning on the invoice or taking a look at one we’re not going to enter the invoice but let’s just take a look at one. Notice here we got a pretty simple form on the right hand side for our data input right here we turn on classes it’ll add a form or have line item or column I should say. So let’s do that. Checking it out, edit drop down, preferences, company preferences, turn it on the classes, and then I’m going to say okay, and so then it’s going to rework this.
And if I go into our invoice now we’ve got this other field for a class, allowing us to add a class every time we enter the transaction. So it adds a little bit more work to the workflow. But it could give you that more detail. If you want to break things out, such as by department. So we’re going to go back in, I’m going to turn them off for our practice problems here preferences, and go to the company preferences turn off the class tracking automatically assigned journal, general journal entry numbers.
So when you enter a journal entry, that it’s going to assign the journal entry number that’s kind of an internal control similar to basically assign it a check number as you go through different checks. And so we’ll keep that on by default, worn when posting a transaction to retained earnings. Retained earnings is it might not even be called retained earnings when we’re a sole proprietorship, but it is it’s going to be cold, like the capital account or equity account in some way.
But it is going to be the account that basically the temporary accounts on the income statement, roll into the balance sheet. So the QuickBooks system will automatically do what we would call the closing process in the accounting cycle, closing out the income statement to an account on the balance sheet, we’re gonna have to assign an account to be closed out into traditionally for a corporation, that would be called retained earnings. And normally you don’t post anything to retained earnings retained earnings is there to show the accumulation of income over overtime that has generated upwards.
So there are some times when you would post there, but generally, you would not, you would not post there. And so they’re saying, We’ll give you a warning every time someone posts something to retained earnings, just to double check is that really what you want to do? So we’ll keep that on by default, worn if transactions are 90 days in the past, one of transactions are 30 days in the future. These can be useful warnings as well, when you’re working in real time, they can be non useful when you are working on a practice problem, for example, or if you’re entering a whole year’s worth of data.
For example, if you hadn’t entered any data for an entire year, you’re trying to get things up to date for the end of the year for your taxes and you’re in work, and you’re trying to enter all the information, say from your bank statements or something like that, then these warnings are going to be very tedious because they’re going to give you a warning every time you enter a transaction past a certain date. So in those instances, you might want to turn them off off.
And in this case, we’re working to practice problems. So I’m going to turn them off in our instance as well just because the practice problem might require us to enter data in prior or future timeframes. And then it says date date through which QuickBooks are closed. By default, there’s no set closing date here. So if we go into this item, it says to keep your financial data secure, QuickBooks recommends assigning all other users their own username and password in company and then they’re set up users.
And so they’re all going to have their own you know, passwords, and one of the things you would like to do is make some restrictions so that they can’t do certain things that might mess up the books, such as posting some prior period transaction to a prior date, once that time frame had been closed already. So QuickBooks will display a warning or require a password when saving a transaction dated on or before the closing date.
So it says here, if you click this exclude estimates, sales orders and purchase orders from the closing date restrictions. So they could still do those particular things. If you click that off, and then you set the closing date. So you’re basically going to say, Hey, I’m closing the books, as of this point in time, this time frame has been closed last year is now closed, don’t post anything to last year. And we’re gonna actually go into restrict, in some way, the posting of items to the to the prior year,
QuickBooks strongly recommend setting a password to protect transactions dated on or before the closing date. So then there’s a closing date password. So then you can only enter something in the prior year, if you have the password, which once again, is there to try to stop people from entering things into the prior period once it had already been closed. The problem with that, of course, is that say last year, you entered the data, you’ve got it all set up. And you’ve then relied on that for your tax returns and your formal financial statements.
And then in the current year, if you did something one of the most common things people do or void a check, for example, in the prior period that had an impact on the income statement, then the income statement had already been determined. So you can’t change the income statement in the prior year because we have already finalized it. So that and that’s where the problem comes in.
So then the income statements or federal rule metal close out or alter the beginning balances in retained earnings. And then it becomes a problem to kind of reconcile the prior year numbers that we had finalized because they have now been changed to the current year numbers that we’re running in the current year. So that’s why it becomes an important thing to kind of stop people from doing that. and changing things in the prior year. If you don’t turn this on, you have a whole lot of flexibility within QuickBooks to change things to delete things and so on.
And that’s good or can be good because it gives you that flexibility, but it also can cause a lot of problems because people go in and change things that they shouldn’t like things in the prior period. So this is one way to kind of control that. So closing that out. Those are the accounting preferences. We’ll continue on to some of the more categories in future presentations.