Quickbooks
Accountancy or accounting is the art of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms that show the economic resources under the control of management.
Such financial information is primarily used by lenders, managers, investors, tax authorities, and other decision makers to make resource allocation decisions between and within companies, organizations, and public agencies. It involves the process of recording, verifying, and reporting of the value of assets, liabilities, income, and expenses in the books of account (ledger) to which debit and credit entries (recognizing transactions) are chronologically posted to record changes in value (see bookkeeping). Accounting has also been defined by the AICPA as "The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."
Etymology
The English term accountant is derived from accomptant, which was pronounced by dropping the 'p' and over time further changed in pronunciation and spelling. Accomptant was derived from the French compter, itself originating from the Latin computare. From the word accountant the term accountancy is derived.
History
Early history
Accountancy's infancy dates back to the earliest days of human agriculture and civilization (the Sumerians in Mesopotamia, and the Egyptian Old Kingdom). Ancient economic thought of the Near East facilitated the creation of accurate records of the quantities and relative values of agricultural products, methods that were formalized in trading and monetary systems by 2000 B.C. Simple accounting is mentioned in the Christian Bible (New Testament) in the Book of Matthew, in the Parable of the Talents. The Islamic Quran also mentions simple accounting for trade and credit arrangements.
In the twelfth-century A.D., the Arab writer, Ibn Taymiyyah, mentioned in his book Hisba (literally, "verification" or "calculation") detailed accounting systems used by Muslims as early as in the mid-seventh century A.D. These accounting practices were influenced by the Roman and the Persian civilizations that Muslims interacted with. The most detailed example Ibn Taymiyyah provides of a complex governmental accounting system is the Divan of Umar, the second Caliph of Islam, in which all revenues and disbursements were recorded. The Divan of Umar has been described in detail by various Islamic historians and was used by Muslim rulers in the Middle East with modifications and enhancements until the fall of the Ottoman Empire.
Luca Pacioli and the birth of modern accountancy
Luca Pacioli (1445 - 1517), also known as Friar Luca dal Borgo, is credited for the "birth" of accountancy. His Summa de arithmetica, geometrica, proportioni et proportionalita (Summa on arithmetic, geometry, proportions and proportionality, Venice 1494), was a textbook for use in the abbaco schools of northern Italy, where the sons of merchants and craftsmen were educated. It was a compendium of the mathematical knowledge of his time, and includes the first printed description of the method of keeping accounts that Venetian merchants used at that time, known as the double-entry bookkeeping system.
Double-entry is defined as any bookkeeping system in which there was a debit and credit entry for each transaction, or for which the majority of transactions were intended to be of this form.
Although Pacioli codified rather than invented this system, he is widely regarded as the "Father of Accounting". The system he published included most of the accounting cycle as it is known today. He described the use of journals and ledgers, and warned that a person should not go to sleep at night until the debits equaled the credits. His ledger had accounts for assets (including receivables and inventories), liabilities, capital (owner's equity), income, and expenses—the account categories that are reported on an organization's balance sheet and income statement, respectively. He demonstrated year-end closing entries and proposed that a trial balance be used to prove a balanced ledger. His treatise also touches on a wide range of related topics from accounting ethics to cost accounting.
Post-Pacioli
The first known book in the English language on accounting was published in London, England by John Gouge (or Gough) in 1543. It is described as A Profitable Treatyce called the Instrument or Boke to learn to know the good order of the kepyng of the famous reconynge, called in Latin, Dare and Habere, and, in English, debtor and Creditor.
A short book of instructions was also published in 1588 by John Mellis of Southwark, England, in which he says, "I am but the renuer and reviver of an ancient old copies printed here in London the 14 of August 1543: collected, published, made, and set forth by one Hugh Oldcastle, Schoolmaster, who, as reappeared by his treatise, then taught Arithmetics, and this booke in Saint Ollaves parish in Marko Lane." Mellis refers to the fact that the principle of accounts he explains (which is a simple system of double entry) is "after the former of Venice".
A book described as The Merchants Mirrour, or directions for the perfect ordering and keeping of his accounts formed by way of Debitor and Creditor, after the (so termed) Italian manner, by Richard Dafforne, accountant, published in 1635, contains many references to early books on the science of accountancy. In a chapter in this book, headed "Opinion of Book-keeping's Antiquity," the author states, on the authority of another writer, that the form of book-keeping referred to had then been in use in Italy about two hundred years, "but that the same, or one in many parts very like this, was used in the time of Julius Caesar, and in Rome long before." He gives quotations of Latin book-keeping terms in use in ancient times, and refers to "ex Oratione Ciceronis pro Roscio Comaedo"; and he adds:
- "That the one side of their booke was used for Debitor, the other for Creditor, is manifest in a certain place, Naturalis Historiae Plinii, lib. 2, cap. 7, where hee, speaking of Fortune, saith thus:
- Huic Omnia Expensa.
- Huic Omnia Feruntur accepta et in tota Ratione mortalium sola.
- Utramque Paginam facit."
An early Dutch writer appears to have suggested that double-entry book-keeping was even in existence among the Greeks, pointing to scientific accountancy having been invented in remote times.
There were several editions of Richard Dafforne's book - the second edition in 1636, the third in 1656, and another in 1684. The book is a very complete treatise on scientific accountancy, beautifully prepared and containing elaborate explanations. The numerous editions tend to prove that the science was highly appreciated in the 17th century. From this time on, there has been a continuous supply of literature on the subject, many of the authors styling themselves accountants and teachers of the art, and thus proving that the professional accountant was then known and employed.
Types of accounting
- Financial accounting is "a major branch of accounting involving the collection, recording and extraction of financial information, and the summary of it in the form of a periodic profit and loss account, a balance sheet and a cash flow statement in accordance with legal, professional, and capital market requirements".
- Management accounting is another branch of accounting performed within an organization to provide information only accessible to its decision-makers.
- Open-book accounting is an accounting principle that aims to improve accounting transparency of organizations.
- Tax accounting is the accounting needed to comply with jurisdictional tax regulations.
- Accounting scholarship is the academic discipline which studies the theory of accountancy.
The related, but separate financial audit comprises internal audit and external audit. External audit—carried out by independent auditors—examines the financial statements and accounting records in order to express an opinion as to the truth and fairness and adherence to Generally Accepted Accounting Principles (GAAP). Commonly used GAAP include the US Financial Accounting Standards Board (FASB), which issues FASB Pronouncements including Statements of Accounting Standards, and the International Accounting Standards Board (IASB), which issues International Financial Reporting Standards (IFRS). Many other countries have instituted local standards resulting in a local country GAAP. Internal audit aims at providing information for management usage, and is typically carried out by employees.
QuickBooks is a line of business accounting software developed and marketed by Intuit.
History
Intuit was founded in 1983 by Scott Cook and Tom Proulx in Mountain View, California, USA. After the success of Quicken for individual financial management, the company looked to provide a similar solution to small business owners giving them a system that required little or no accounting experience, yet helping provide financial structure and compliance.
Initial release
The software was popular among small business owners who had no formal accounting training. As such, the software soon claimed up to 80 percent of the small business accounting software market. It continues to command the vast majority of this market. Professional accountants, however, were not satisfied with early versions of the system, citing poor security controls such as no audit trail, as well as non-conformity with traditional accounting standards. (Such accountants often provide small businesses with monthly and year-end services that require data from the software used for day-to-day operations by the business.
Subsequent releases
Intuit sought to bridge the gap with these accounting professionals, eventually providing full audit trail capabilities, double-entry accounting functions and increased functions. By 2000, Intuit had developed Basic and Pro versions of the software and, in 2003, started offering industry-specific versions, with workflow processes and reports designed for each of these business types along with terminology associated with the trades.
Options now include versions for manufacturers, wholesalers, professional service firms, contractors, non-profit entities and retailers, in addition to one specifically designed for professional accounting firms who service multiple small business clients. In May 2002 Intuit launched QuickBooks Enterprise Solutions for medium-sized businesses.
A September 5, 2005 Business Week article said that QuickBooks had 74% of the market. A June 19, 2008 Intuit Press Release said that as of March 2008, QuickBooks' share of retail units in the business accounting category reached 94.2 percent, according to NPD Group. It also says that more than 50,000 accountants, CPAs and independent business consultants are members of the QuickBooks ProAdvisor program. By then Brad Smith was the new CEO, though Bennett had nearly tripled Intuit revenue and quadrupled earnings in eight years.
International versions
Versions of this product are available in many different markets. Intuit's Canadian and U.K. divisions offer versions of QuickBooks that support the unique needs of each region, such as Canada's GST or PST sales tax and the U.K.'s Value Added Tax (VAT). Reckon Ltd (Australian Securities Exchange (ASX):RKN) under licence from Intuit, publishes versions for the Australian, New Zealand and Singapore markets. Version 2008 has enhanced support for Irish VAT reporting. The Mac version is only available in the US.
General features and use
Small businesses use QuickBooks for most financially-related business processes, from entering sales receipts, tracking expenses, preparing and sending invoices, sales tax tracking and payment, preparation of basic financial statements and reports, and inventory management. The program does not include MICR line printing, but does include check printing and options for employee payroll and time tracking. For most tasks, QuickBooks doesn't require users to understand standard accounting procedures, including double-entry bookkeeping. Most transactions are recorded using on-line screens that closely resemble paper based forms such as invoices or checks.
Recent feature additions
Intuit has integrated several web-based features into QuickBooks, including remote access capabilities, remote payroll assistance and outsourcing, electronic payment functions, online banking and reconciliation, mapping features through integration with Google Maps, marketing options through Google, and improved e-mail functionality through Microsoft Outlook and Outlook Express. For the 2008 version, the company has also added import from Excel spreadsheets, additional employee time tracking options, pre-authorization of electronic funds and new Help functions. In June 2007, Intuit announced that QuickBooks Enterprise Solutions would run on Linux servers, whereas previously it required a Windows server to run.
QuickBooks Online Edition
Intuit also offers a hosted solution called QuickBooks Online Edition (QBOE). The user pays a monthly subscription fee rather than an upfront fee and accesses the software exclusively through a secure logon via a web browser. Intuit hosts all of the user's data, provides patches, and regularly upgrades the software automatically.
Until recently, the only browser supported by QuickBooks Online was Internet Explorer. However, Mozilla FireFox is now supported and Intuit has announced future support for Safari on the Mac platform. One may also access QuickBooks Online via an iPhone app.
QuickBooks Online does not support all features of the desktop versions of QuickBooks. Specifically, inventory, purchase orders, and online bill payment are not included in the product and are only supported via third-party add-ons.
QuickBooks Point of Sale
QuickBooks Point of Sale is software that replaces a retailer's cash register, tracks their inventory, sales, and customer information, and provides reports for managing their business and serving their customers.
Add-on programs
Through the Solutions Marketplace, Intuit has encouraged third-party software developers to create programs that fill niche areas for specific industries and integrate with QuickBooks. These systems often provide enhanced options for payroll, inventory, distribution, billing and other functions. The Intuit Developer Network provides marketing and technical resources including all SDKs.
The application 'Customer Manager' is a CRM application that integrates QuickBooks data with customer data, including that found in other software such as Microsoft Outlook.
Payroll Products allow the processing of timesheets and processing payroll. Annual updates are available by subscription. In 2007, Payroll.com added Intuit Online Payroll to its suite of payroll solutions. Intuit Online Payroll is a web-based service that is designed to let businesses handle their payroll without the use of QuickBooks software.
Online Terminal is a web-based service aimed at enabling very small or home-based businesses to take credit card payments, without needing a credit card terminal or any special processing software. The cost of the service is subscription to a merchant account. Its features include emailing of confirmation receipts, six months of transaction history, and tracking of merchant account funds.
Lacerte, a tax preparation software used by professional accountants who prepare taxes for a living, integrates with QuickBooks.
Qvinci™is a management and operations solution that incorporates QuickBooks data into a dashboard framework and then offers many capabilities such as graphing, trending, forward looking projections, early warning indicators, key performance indicators, as well as many others. Qvinci is like a GPS for your business.
ACCTivate! extends the QuickBooks functionality with Inventory management, warehousing, CRM and sales order management capabilities.
Compared to other versions of QuickBooks, fewer third-party add-ons integrate with QuickBooks Online Edition. Examples include Service Sidekick, a field service management application, and OE Companion, a suite of web-based add-ons.
Criticisms
The 1999 version of QuickBooks forced users to pay an additional fee for payroll table updates.
On 15 December 2007, the company released a version of its automatic updater for Mac OS X with a serious program error. The company fixed the updater on 17 December, but by then it had caused substantial data loss for a number of users.
QuickBooks Online suffered an extended outage on February 2, 2009.
ABOUT PAYROLLIn a company, payroll is the sum of all financial records of salaries, wages, bonuses and deductions.
Paycheck
A paycheck, is traditionally a paper document issued by an employer to pay an employee for services rendered. While most commonly used in the United States, recently the physical paycheck has been increasingly replaced by electronic direct deposit to bank accounts.
In most countries with a developed wire transfer system, using a physical check for paying wages and salaries has been uncommon for the past several decades. However, vocabulary referring to the figurative "paycheck" does exist in some languages, like German (Gehaltsscheck), partially due to the influence of US popular media, but this commonly refers to a payslip or stub rather than an actual check. Some company payrolls have eliminated both the paper check and stub, in which case an electronic image of the stub is available on an Internet website.
Payroll taxes
Federal/national, state/provincial, and/or local agencies require employers to perform various payroll functions, such as withholding amounts from employees' compensation to cover income tax, Social Security, and Medicare.
Payroll taxes are levied by government agencies on employees' wages, tips, and other compensation. The amounts withheld by employers from employees' pay for federal income, social security, and Medicare taxes are considered to be trust-fund taxes, because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state and local governments.
Pay slip
A pay stub, paystub, pay slip, pay advice, or sometimes paycheck stub, is a document an employee receives either as a notice that the direct deposit transaction has gone through, or as part of their paycheck. It will typically detail the gross income and all taxes and any other deductions such as retirement plan contributions, insurances, garnishments, or charitable contributions taken out of the gross amount to arrive at the final net amount of the pay, also including the year to date totals in some circumstances.
Payroll card
A payroll card is a plastic card allowing an employee to access their pay by using a debit card. A payroll card can be more convenient than using a check casher, because it can be used at participating automatic teller machines to withdraw cash, or in retail environments to make purchases. Some payroll cards are cheaper than payday loans available from retail check cashing stores, but others are not. Most payroll cards will charge a fee if used at an ATM more than once per pay period.
The payroll card account may be held as a single account in the employer's name. In that case, the account holds the payroll funds for all employees using the payroll card system. Some payroll card programs establish a separate account for each employee, but others do not.
Many payroll cards are individually owned dda (demand deposit accounts) that are owned by the employee. These cards are more flexible, allowing the employee to use the card for paying bills, and the accounts are portable. Most payroll card accounts are FDIC-insured, but some are not.
Payroll Frequencies
Companies typically generate their payrolls on regular intervals, for the benefit of regular income to their employees. The regularity of the intervals, though, varies from company to company, and sometimes between job grades within a given company. Common payroll frequencies include: daily, weekly, bi-weekly (once every two weeks), semi-monthly (twice per month), and to somewhat of a lesser extent, monthly. Less common payroll frequencies include: 4-weekly (13 times per year), bi-monthly (once every two months), quarterly (once every 13 weeks), semi-annually (twice per year), and annually.
Payroll Professionals
In Canada Payroll Professionals are Certified by the Canadian Payroll Association. They are qualified as either 'Payroll Compliance Practitioners (PCP)' or as 'Certified Payroll Managers(CPM)'.
In the United States Payroll Professionals are Certified by the American Payroll Association. They are designated as Fundamental Payroll Certification (FPC) or Certified Payroll Professional (CPP) after passing the appropriate certification exam.
Upon completion of the required course material and with continuing education and membership fees the person is then entitled to the post-nominal letters associated with their current level of accomplishment.
In the United Kingdom, payroll professionals are represented by the Institute of Payroll Professionals.
Warrants
Payroll warrants look like checks and clear through the banking system like checks, but are not drawn against cleared funds in a deposit account. Instead they are drawn against "available funds" that are not in a bank account, so the issuer can collect interest on the float. In the US, warrants are issued by government entities such as the military and state and county governments. Warrants are issued for payroll to individuals and for accounts payable to vendors. Technically a warrant is not payable on demand and may not be negotiable. Deposited warrants are routed to a collecting bank which processes them as collection items like maturing treasury bills and presents the warrants to the government entity's Treasury Department for payment each business day.
Payroll Outsourcing
Businesses may decide to outsource their payroll functions to an outsourcing service like a payroll bureau or a fully managed payroll service. These can normally reduce the costs involved in having payroll trained employees in-house as well as the costs of systems and software needed to process payroll. In the UK, payroll bureaux will deal with all HM Revenue & Customs enquiries and deal with employee's queries. Payroll bureaux also produce reports for the businesses' account department and payslips for the employees and can also make the payments to the employees if required.
Another reason many businesses outsource is because of the ever increasing complexity of payroll legislation. Annual changes in tax codes, PAYE and National Insurance bands as well as more and more statutory payments and deductions having to go through the payroll often mean there is a lot to keep abreast of in order to maintain compliance with the current legislation.
