In addition to the water that evaporates while curing, concrete is made up of 3 fundamental components: sand, rock and cement. When mixed together in the proper ratio, and allowed to ‘cure’ over time, concrete becomes the ‘foundation’ for almost everything constructed from highways to bridges, buildings to patios.
The QuickBooks Foundation
Just like your home, there is an essential foundation when it comes to QuickBooks, and like concrete it is made up of 3 fundamental components: 1) Set-up fundamentals, 2) Accounting fundamentals, and 3) Operational fundamentals.
Each of these are critical to the successful use of QuickBooks. For example, if you set it up wrong in the beginning your records will never be right. Equally, if you refuse to follow the appropriate steps in the correct sequence (operating fundamentals), your QuickBooks results will be trash as well. I hardly need to mention that ‘despite Intuit attempting to make everyone think they don’t need to know a “lick of accounting” to use QuickBooks’, if you don’t have a basic understanding of Assets, Liabilities, Equity, Income, Expense, Debits and Credits, you are in trouble. After all ‘this is still “accounting software”.
Faulty Set-up Fundamental:
“We originally set-up all of our items as inventory even though we rarely keep any quantities on hand, how can I turn inventory items into non-inventory items?”
“We have a payroll item that is showing up as taxable but it isn’t. How do we fix that?”
Faulty Accounting Fundamental:
“To what Income account do I post a leasehold improvement allowance my company received from our Landlord?”
“When do I set up something as a cost of goods sold?”
Faulty Operational Fundamentals:
“My tax man is asking me what ‘Opening Balance Equity’ is, and for the life of me I have no idea where the $30-sumpthing-thousand dollars in that account came from?”
“So since we always have items dropped-shipped, does it hurt anything if we ignore the insufficient quantity warning for inventory items, and go ahead and sell the items even though we have 100’s of negative items?”
The importance of setting up and using QuickBooks correctly means the difference between having results you can use or having information that means absolutely nothing.