Q&A Week 3 Working Papers: Mastering QuickBooks Software

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Here are the questions from Week #3

Q: Ongoing dilemna regarding professional judgement..client hands me a receipt that has some sor tof business expense written on it.. because I know the client, I know it's a personal expense...how do I handle this? Just go with what's written on the receipt?  It's such a grey area..
A: Highly recommend several activities to help with ethical dilemnas like this one. One, take an ethics course, CGA BC offers them. Two. Read the IC-01 about Civil Penalties on the CRA website and learn about the penalties for ignoring what you know. After you've read that guide, consider the penalties for ignoring that niggling feeling that you should know better, the minimum fine is $1,000 and the maximum is $100,000. I found it makes it much easier for me to listen to my gut when I know my pocketbook could be affected directly.

Q: Can you show how you will tie your ADJ TB references into the OneNote file?
A: I would include the ADJ Trial Balance references on the WTB (Working Trial Balance) in QuickBooks and then include a copy of the WTB in the OneNote file

Q:Can you sort to find transactions dated for a prior yearend, but entered after a specific date in the year year?
A: Yes, by adding an Entered/Last Modified column to the detailed transaction report, then filtering the Report Date Range for last year and then Sorting by Entered/Last Modified

Q: Do we need to do a working paper for each account?
A: Yes, probably a good idea, and even for accounts for which there is a nil balance beginning and ending, as there may be transactions that went through the account and those may be important.  One example, might be where a Deposit is received from a customer and it's coded to a Clearing Account.  Then the Deposit is paid out to the Shareholder directly, without any transaction recorded or reporting a dividend payout. (Ugly coyote, very fraudulent)

Q: Eileen mentioned 2 courses, Auditing, aka external audit firms do this type of audit and Internal Audit, aka Management Auditor audit internally for effectiveness and/or efficiency. Can she list typical places where these courses are available for bookkeepers who aren't accounting students as in CA, CGA, CMA?
A: Your local college will have equivalency courses.

Q: I perform a number of new QuickBooks setups annually, typically with similar GL's. Is there any suggestion on how to bring in the customized/memorized report list to the new install re Lead Sheets, Ledgers Reports, Mgmt Reports Etc.?
A: Go to the MemRep List. Select the MemRep you want to export. Go to the bottom of the list and select Memorized Report dropdown menu. Select Export Template, name it and save. Open the new data file, go to the MemRep List and Import Template. Edit the Template to ensure it's compatible.

Q: In the P&L report, double clicking on the total provides a more detailed report, showing debits and credits which is a fast way to see if something is posted backwards
A: Same with any account or category on any Summary report, such as the Balance Sheet, Income Statement, Customer Receivables, Payables. But.. that report doesn't give you as many options to add columns or to filter as does the Custom Reports > Custom Transactions Detail. You'll find Custom reports on the drop down of Reports on the top menu bar.  That report opens you up to all the possibilities that exist.  Drilling down only provides some of the functionality.

Q: What do you do if a company starts as a sole proprietor then gets incorporated? Do you have to do a different company when incorporated?
A: Great question, in fact, I'd say it's the best of the day.  Yes, it's absolutely essential to start a new business and and a new general ledger, as well as to register for a new BN #, WCB #, Payroll & GST/HST, etc. A company is a separate legal entity.  When the sole proprietorship winds down, they must sell their assets, net of their liabilities, if they choose, to the new company.  There is the possibility to roll the assets, net of payment for those assets, plus taking back shares, tax free via a S. 85 rollover and that requires a written contract between the sole proprietor and the company. This isn't something that you just do, this is something you pay an expert in this area of taxation to do, as not doing it right can cost big. For example, if you didn't sell the goodwill of the business and take back shares and boot (debt) there could be a significant problem down the road should the goodwill grow and the company never bought it at the beginning.

Q: Which Item Type would you use for COGS/Revenue?
A: You could use any or all of the types. It depends on what you are doing.  There are various types and you might use any one of them, depending on how you wanted your reporting to look.  Try out some different types to see what the reporting looks like by going to the Report drop down menu and selecting Jobs, Time & Mileage reporting, and open up the Sales by Item Profitability reporting.  Remember that you have to record the Customer Name on the Purchases to get this type of reporting to work (I know it's not logical, and if you don't know the customer name, make up a fake one and use it on the Purchases in the Item side of the Tabs to get the reporting to work)

Q: If the bookkeeper provided the working papers, would it be reasonable to expect some savings for the client on the accountant's year end fees? 
A: You'd think so, but I doubt it, as the accountant still has to review all the work, and that still takes time.  It helps the bookkeeper and the business to ensure they have done everything possible to reduce the accountant's time though, and provides a level of assurance that to the best of their ability they have done everything possible to reduce costs.

Q: You were going to explain Name and Source Name and why you need both
A: The Source Name is the name of the Vendor on a Bill.  When you assign a Customer to that cost, you'll find that the reporting picks up the Customer name in the Name field.  If there's no Customer name included in the Bill on the cost line, then the default is to report the Name as the same as the Source Name. See the Q&A above discussing the use of Item Profitability and why it's required to allocate costs to customers in order for the Item Profitability and Job Profitability by Customer reporting to work.  If your costs of goods sold have all been assigned to Customer Names, then you'll find that the Item Profitability and the Job Profitability reports agree to the Income STatement Revenue less COGS (Net Profit before Expenses) but only if you used Forms and on those Forms utilized the Items side of the tabs to record the COGS.