Accounting with QuickBooks Online

Chapter 2 Setting Up a New Company

 Learning Objectives

After you have completed this chapter, you will be able to do the following:

  1. Modify company settings
  2. Modify the chart of accounts
  3. Add customers
  4. Add vendors
  5. Add employees

Overview

You began this process in Chapter 1 when you created your account and provided basic information about your company, including the company name, address, etc. Now it’s time to continue that process.

The tasks you accomplish on your company are permanent and will be there after you close your QuickBooks Online browser window. There is no Save File or Save File As command in QuickBooks Online. Everything is saved for you.

The focus of this chapter is to get your QuickBooks Online company ready to accept business transactions. To do so you will need to modify your company settings, modify the chart of accounts, and add customers, vendors, and employees.

Once again you should remember that the figures and steps provided and described in this supplement were accurate on the day they were captured. Intuit may have changed the location, the description, or the process for recording certain business transactions and thus at any point in time the figures may not match your screen or the steps described may not match those described here. Changes should not be significant but the author does not control or have any influence over QuickBooks Online developers.

Modifying Company Settings

There are five sections to consider modifying in QuickBooks Online. All of these sections are accessed from the Gear icon and then by selecting a specific tab. The Company tab includes company name, accounting method, etc. The Sales tab includes invoice terms and other sales form content. The Expenses tab includes options for bills, expenses, and purchase orders. The Payments tab includes options for QuickBooks payments which you will not use. The Advanced tab includes options for a fiscal year, chart of account numbers and other preferences.

You decide to tailor QuickBooks Online to Magnolia’s specific needs by modifying company settings.

To modify company settings:

 

  1. Type https://qbo.intuit.com/ into your web browser.
  2. Type your User ID and Password as you did in Chapter 1.
  3. Click the Gear icon from the Home page and then click Company Settings
  4. The Company tab should be selected. Your information should be shown here. No changes need to be made for your company.
  5. Click the Sales tab to view the information. No changes need to be made for your company at this time.
  6. Click the Expenses tab to view the information. No changes need to be made for your company at this time. Later we will make purchase orders active.
  7. Click the Payments tab to view the information. No changes need to be made for your company at this time.
  8. Click the Advanced tab to view the information
  9. Click the pencil icon to edit the Accounting section.
  10. Select July as the First month of fiscal year. Do not place a check in the Close the books check box.
  11. Click Save.
  12. Click the pencil icon to edit the Chart of Accounts section, then place a check in the Enable account numbers and the Show account numbers checkboxes
  13. Click Save to save your changes and then click Done to return to the Home page.

Modifying the Chart of Accounts

In this section, you will be adding new accounts to your company, modifying some existing accounts, and deleting other existing accounts. Since you are establishing this QuickBooks Online file for a company at its initial state there is no need to establishing beginning balances. Each account will have a number, name, type, and detail type. Type is later referred to as Category Type, which gives each account specific characteristics, including what financial statement it will appear on and where.

Some accounts are required and cannot be deleted even though they do not apply to your company, for example, Undeposited Funds, Opening Balance Equity, Retained Earnings, and Non Profit Income.

To modify the chart of accounts:

  1. Click the Gear icon and then select Chart of Accounts
  2. A partial view of the Chart of Accounts window is shown
  3. Click New to reveal an Account window.
  4. Select Bank from the Category Type drop-down list
  5. Select Checking from the Detail Type list
  6. Type Cash in the Name text box and 111 in the Number text box
  7. Click Save and Close to view the updated Chart of Accounts
  8. Add the following accounts:
    1. Accounts Receivable…….Accounts Receivable………. Accounts Receivable………. 113
    2. Other Current Asset ………. Development Costs………. PrePaid Insurance………. 117
    3. Other Current Asset………. Undeposited Funds ………. Undeposited Funds………. 118
    4. Income ………. Services/Fees………. Income from Services………. 411
    5. Expenses ………. Rent or Lease of Buildings………. Rent Expense………. 612
    6. Expenses………. Supplies & Materials………. Spa Supplies Expense………. 614
    7. Expenses………. Advertising/Promotional………. Advertising Expense ………. 616
    8. Expenses ………. Utilities ………. Utilities Expense………. 617
    9. Expenses………. Insurance………. Insurance Expense………. 618
    10. Expenses ………. Other Miscellaneous Service Cost………. Miscellaneous Expense………. 630
  9. Click Save to save your changes.
  10. Click the Action down arrow on the Uncategorized Asset account line and select Delete
  11. Click Yes to confirm account deletion.
  12. Delete accounts using the process you just completed until your Chart of Accounts list looks like this:
  13. Click New to add the following accounts. (Note: after you add an account click Save and New to add an additional account until all new accounts are added.)
Category Type Detail Type Name Number
Other Current Assets Other Current Assets Office Supplies 114
Other Current Assets Other Current Assets Spa Supplies 115
Fixed Assets Machinery & Equipment Office Equipment 124
Fixed Assets Accumulated Depreciation Accum. Depr. – Office Equipment 125
Fixed Assets Machinery & Equipment Spa Equipment 128
Fixed Assets Accumulated Depreciation Accum. Depr. – Spa Equipment 129
Accounts Payable (A/P) Accounts Payable (A/P) Accounts Payable 211
Other Current Liabilities Other Current Liabilities Wages Payable 212
Equity Owner’s Equity Lewis, Capital 311
Equity Owner’s Equity Lewis, Drawing 312
Expenses Payroll Expenses Wages Expense 611
Expenses Office/General Administrative Expenses Office Supplies Expense 613
Expenses Supplies & Materials Laundry Expense 615
Other Expenses Depreciation Depr. Expense – Office Equipment 619
Other Expenses Depreciation Depr. Expense – Spa Equipment 620

Adding Customers

QuickBooks Online allows you to add customers as you record sales or before you record sales. You decided to add customers as a part of your setup and then add new customers as new sales occur. For this text only customer names will be added. Normally you would include a customer’s address and other contact information.

To add customers:

  1. Click Sales from the Navigation bar on the left side of the screen
  2. Click Customers toward the top of the screen
  3. Type Jill Anson in the name text box
  4. Click Add Customer and then click New customer from the Customers page.
  5. Add the following additional customers. After you click Save you’ll need to click  THE BACK ARROW and then click New customer to add more–ONLY FILL IN THE FIRST NAME & LAST NAME TEXT BOXES
    1. Jack Morgan
    2. Tory Ligman
    3. Judy Wilcox
  6. Click Sales from the Navigation bar and CUSTOMERS to view the Customers Page

Adding Vendors

QuickBooks Online also allows you to add vendors as you record purchases or before you record purchases. You decided to add vendors as a part of your setup and then add new vendors as new purchases occur. For this text only vendor names will be added. Normally you would include a vendor’s address and other contact information.

To add vendors:

  1. Click  Expenses from the Navigation bar.
  2. Click VENDOR
  3. Click Add A Vendor.
  4. Type Spa Supplies, Inc. in the Company text box
  5. Click Save.
  6. Add the following additional vendors using the same process:
    1. Office Equipment Company
    2. Office Staples
    3. Adco, Inc.

Adding Employers

You have chosen not to use Intuit’s payroll service in QuickBooks Online. Instead you choose to calculate payroll manually. QuickBooks Online allows you to add employees as you record payroll or before you record payroll. You decided to add employees as part of your setup and then add new employees as they are hired. For this text only employee names will be added. Normally you would include an employee’s address and other contact and payroll deduction information.

To add employees:

  1. Click Workers from the Navigation bar.
  2. Click Add An Employee.
  3. Type Sarah Polin in the First name and Last name text boxes
  4. Click DONE
  5. Click FINISH THIS LATER
  6. Add the following additional employees using the same process:
    1. Graham Ogilvie
    2. Hector Alvarez
    3. Jen Hansen

Review It with QuickBooks

Answer the following in a Google Doc shared with me:

  1. QuickBooks Online allows for modifications in five different areas. The Advanced tab allows users to modify which of the following:
    1. Company information
    2. Sales
    3. Chart of account numbers
    4. Invoice terms
    5. None of the above
  2. In QuickBooks Online, accounts listed in the chart of accounts include all of the following, except:
    1. Account numbers
    2. Account nonprofit income
    3. Account name
    4. Account type
    5. All of the above
  3. Which of the following accounts in QuickBooks Online cannot be deleted?
    1. Category type accounts
    2. Undeposited Funds
    3. Opening Balance Equity
    4. Retained Earnings
    5. Non Profit Income

 End Note

You have now modified your company settings and chart of accounts, and added customers, vendors, and employees. Next up, in Chapter 3, recording business transactions and preparing a trial balance, income statement, and balance sheet.