Question

Develop a report that includes the following sections: (Use the required sections as headers in your report.) Section I: Overview Provide a general overview of QuickBooks. Make sure the overview provides the reader with a general understanding of the application, including costs, functionality and minimum system requirements. Section II: Transactional Processing and Data Management Describe how QuickBooks handles processing the accounting transactions and recording business activities for the revenue, expenditure and financing cycles. You should provide at least one detailed example of how one would record a specific accounting transaction/ business activity for each of the three transaction cycles below. Address the following questions in this section of the report. Revenue Cycle (Answer the following questions) How can you create and maintain customers? How can you create customer invoices? How can you apply customer payments? What reports can you run to provide you with information regarding your customers and their orders? Describe them. What reports can you run in order to provide you with information regarding key revenue cycle information - sales, accounts receivable, cash? Expenditure Cycle (Answer the following questions) How can you create and maintain vendors? How can you create and maintain inventory? How can you generate payments to vendors? What reports can you run to provide you with information regarding your vendors and your accounts payable? Describe them. What reports can you run in order to provide you with information regarding key expenditure cycle information – purchases, inventory, and cash? Financing Cycle (Answer the following questions) How can you create and maintain the chart of accounts? How can you post journal entries? What are the key financial statements that are available? Describe them. What are some key reports one can generate to measure the firm’s financial performance? Section III: Internal Controls How can QuickBooks enhance internal controls? How can you secure the system and files? What potential security weaknesses exist for QuickBooks? Section IV: Charts and Graphs How are visualizations formatted and used? What charts are available and how are charts created? What is a data diagram in QuickBooks?

Answer 1

Section -1:
QuickBooks is Intuit Inc's set of software solutions designed to manage payroll, inventory, sales and other needs of a small business. The software's features include marketing tools, merchant services, product and supplies, training solutions. Each solution is developed according to different industries and their needs.
Overview
If you’ve heard of accounting, you’ve heard of Intuit QuickBooks. Intuit was founded in 1983 with the idea that there should be a better, simpler way to do accounting; it has been one of the biggest names in accounting and personal finance for three decades now. The company’s first product, Quicken, was launched in 1984. QuickBooks followed in 2002, and QuickBooks Online came along two years later.
QuickBooks Online offers true double-entry accounting with ample reports and a strong chart of accounts, as well as customizable invoices, inventory capabilities, payroll support, multiple currencies, and over 400 integrations. Since its inception, QuickBooks Online has grown to 2.2 million users and the software has seen some significant changes and advancements, including a brand new lending feature called QuickBooks Capital (see our review). The software continues to be updated on a regular basis, and one of the most recent updates includes a long-awaited project management feature. However, in gaining a project management feature, the software has virtually lost its time tracking feature.
There are few other downsides to QuickBooks Online, which is generally a feature-rich, high-quality software. The customer service leaves something to be desired; both the quality and quantity of support are surprisingly poor for such a large company. A few customers complain that QuickBooks Online still cannot compare to its desktop counterpart. And to top it off, the company has increased prices. But the biggest issue by far is that the notoriously easy-to-use software has become incredibly complicated, unintuitive, and hard to navigate–so much so that for the first time in my tenure at Merchant Maverick, we’ve had to drop the software from 5 stars to 4.5 stars.
That said, a 4.5 star rating still places QuickBooks Online far above the average cloud program. There are several features offered by QuickBooks Online that you can’t get with the more traditional, locally-installed version of QuickBooks (such as automatic sales receipts, split transactions, scheduled invoices, and location and class categories). Many customers believe the sheer mobility of QuickBooks Online is entirely worth the upgrade. And despite the now convoluted navigation, the program still has a better learning curve than QuickBooks Pro.
Continue reading to learn more about QuickBooks Online’s recent changes and to see if QuickBooks Online is a good fit for your business.
Have you received a loan offer from QuickBooks Capital? Read our complete QuickBooks Capital review to learn more about this financing option.
Tired of slow-paying customers? Looking for a more consistent cash flow? With invoice factoring, it’s possible to get cash for your invoices right away. Learn more about invoice factoring in our Basic Introduction to Invoice Factoring guide and/or check out two of our favorite invoice factors: Fundbox and BlueVine.
Pros
Impressive features
Cloud-based
Advanced inventory featuresSection 2
In accrual accounting, you record income when you complete a service or when goods are shipped and delivered. Although most small businesses, particularly sole proprietorships and partnerships, use the cash method, the IRS states, “If an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases.”
The inventories rule generally applies to businesses that gross receipts over $1 million per year. Certain organizations grossing sales over $5 million are also required to use accrual accounting to report business income and expenses.
If your business falls under these rules, or if you’re simply debating whether the accrual method is right for your business, read on for an overview on some of the benefits and drawbacks of accrual accounting.
How Accrual Accounting Works
Unlike cash accounting, where income is recorded when cash payments (these can also be credit-card receipts, checks or other forms of payment) are received from customers and expenses are recorded when cash is paid to vendors, accrual accounting focuses on when income is earned and expenses are incurred. Consequently, all transactions are recorded regardless of when cash exchanges hands.
For example, if you sell merchandise to a customer on store credit during the month of October, the accrual method dictates that you record the transaction immediately as an item in accounts receivable until you receive payment. Even if the customer doesn’t make a cash payment on the merchandise until December, the transaction should be recorded as income for the month of October.
The same applies to any goods or services you buy on credit. Supplies purchased on credit in April are recorded as expenses for the month of April under the accrual method, even if you don’t make a cash payment on those supplies until May. Thus, business expenses are recorded when you receive products and services, even if you haven’t yet paid for these items or if they’re for future use.
According to the IRS, companies can use either the cash method or accrual method to figure taxable income and keep their books for the tax year. However, certain businesses that produce, purchase or sell merchandise, or that earn gross sales over $5 million, must use the accrual method in their accounting.
For more information on exceptions to these rules and other restrictions, review IRS Publication 334: Accounting Periods and Methods.
Advantages of the Accrual Accounting
Recording cash transactions based on when services are completed, products are delivered and expenses are incurred can provide a more accurate view of your business’ performance.
Here are the main advantages typically associated with accrual accounting.
Accrual accounting matches income with related expenses
One of the main benefits of accrual accounting is that it more accurately captures business activity and profitability compared to cash accounting. Accrual accounting is particularly helpful for measuring profitability during a specific month or tax year if your company bills customers at a later date for services already performed, or if it sells products to customers on store credit. The same applies to expenses like insurance premiums, which are paid upfront but used at a later date.
Take the following example:
Your company spends $500 organizing an event in November, but doesn’t receive the $1,000 payment for that event until February.
Using the accrual method, your income statement will now show $1,000 of revenues in November.
Additionally, the $1,000 will also be reflected as an accounts receivable item on your November balance sheet.
Finally, the estimated true profit of $500 for the service delivered will be added to your owner’s equity or retained earnings.
Despite the time lag between the delivery of services and receipt of payment, the event’s expenses are matched with the event’s revenues irrespective of when the customer actually pays.
Accrual accounting can defer your tax liability
Both cash accounting and accrual accounting can offer flexibility around tax planning. In the case of accrual accounting, if you receive an advance payment in 2015 for services that you agree to perform by the end of the following year, you can delay paying taxes on that income until the next tax year.
See IRS guidelines on how to report advance payment for services using the accrual accounting method.
Disadvantages of Accrual Accounting
Whereas accrual accounting’s strengths lie in accurately showing business profitability and representing long-term revenues and expenses, it has a few drawbacks as well.
Here are some pitfalls of accrual accounting to keep in mind if you’re contemplating transitioning from the cash method.
Accrual accounting ignores cash flows
Under the accrual accounting method, the amount of cash coming in from your sales may not always match up with the revenues you’re reporting on your books. In other words, even if your income statement shows thousands of dollars in sales, your actual bank account may show a smaller balance if customers haven’t paid what they owe you. As a result, accrual accounting does a poor job of tracking cash flows.
Accrual accounting requires more bookkeeping and staff resources
Due to the added complexity and paperwork required under the accrual method of accounting, it tends to be viewed by small business owners as more complicated and expensive to implement. Because you record revenues before you actually see the cash, you’ll need to track your cash flow separately under the accrual method to ensure you can cover your bills from month to month.
One way to offset the people and time resources required under accrual accounting is to invest in automation tools and software, such as QuickBooks.
Using the Accrual Method for Your Business
According to the Financial Accounting Standards Board (FASB), “Accrual accounting goes beyond cash transactions to provide information about assets, liabilities and earnings.” In other words, accrual accounting provides a better picture of your overall financial position. Since the accrual method conforms to GAAP, the set of guidelines and rules used to prepare and standardize the financial reports of both public and private companies in the U.S., accrual accounting is widely considered to be the standard (and oftentimes more accurate) accounting method for most companies.
If you’re contemplating moving your organization from cash accounting to accrual accounting, or to a hybrid method that combines cash, accrual and special methods of accounting, refer to IRS Publication 538 and Form 3115 for further guidance.

Numerous integrations
Good tax support
Good mobile apps
Cons
Poor customer support
Unintuitive UI
Buggy