Question

Cooking with QuickBooks Discussion

Part 1:

Benefits of QuickBooks Software

Who knew how much work it could be to run a restaurant?! You are doing well in your new business and have done a wonderful job exploring the accounting equation, chart of accounts, and recording transactions. Previously, you did some research to find out what QuickBooks is and how it might be helpful in recording business transactions. You will do a bit more research on QuickBooks here to find out what it is capable of, beyond just recording business transactions. Explain to your classmates how QuickBooks might be able to help you with the trial balance and financial statements.

Part 2:

Pay the Cooks

By now, your fictitious restaurant has been up and running for a short time. Hopefully your customers are all going home with a full stomach and a plan to return again soon! You have already looked at how QuickBooks might help you begin to record your business transactions. Explain the five basic steps of transaction analysis. After explaining the steps, walk through the steps for the following transaction: You paid your kitchen cooks $500 in cash for their first week of work.

Answer 1

Trial Balance is the tabular form representation of all the account balances in the business required to prepare financial statements viz statement of financial position, statement of revenue and expenditure and cashflow statements. In earlier times when the books were prepared manually, accountants had to create journal entries, post those entries into ledger and the ledgers used to get accumulated to trial balance to form financial statements. However, in a software like Quickbooks. One only has to make the entries into the software by creating ledger accounts and the logics & algorithm in the software automatically assemble data to generate reports like trial balance. One hardly has to take any extra step to make those statements.

Part 2

Five basic steps are and analysis of the transaction given are:

• Analyze Transactions: Transaction invleves payment of cash for the wages which is an expense in the business

• Journalize Entries: It includes following four parts :

  • The account and amount of debit: Wages expenses and $ 500
  • The account and amount of credit: Cash and $ 500
  • The transaction date: Date of payment
  • The transaction description: Wages paid in cash recorded

• Post Accounts: Post the entries into cash and wages accounts

• Trial Balance: The amount of closing balances in cash and wages are than posted into financial statements

• Financial Statements: Closing balances are than posted to balance sheet (cash) and income statements (expenses)