QuickBooks Accounting Cycles

Republic of the Philippines
CARLOS HILADO MEMORIAL STATE UNIVERSITY

CBMA, Fortune Towne Campus, Brgy. Estefania, Bacolod City
QuickBooks Final Output
Submitted by:
Abao, Herrie
Caballero, Krizah Marie
Celebre, Charelle Joise
Del Rosario, Shaye
Gea, Faith
Submitted to:
Rienz Ryan Barrameda
QUESTIONS
1. What are the accounting processes/cycles present in the QuickBooks? (No screen shots needed but
you can refer to the figure no. of the related screen shots if presented in the succeeding answers)
Answer: The accounting cycle is the foundation of accounting practices in a company. Companies can
keep track of financial transactions, safeguard their assets from loss or theft, and provide accurate
financial statements by adhering to the accounting cycle. The accounting processes/cycles present in the
QuickBooks are the following:
 Journalizing transactions
 Posting to the ledger
 Creating trial balance
 End-of-the period adjustments
 Creating financial statements
 Closing of the books of accounts
 Creating post-closing trial balance
 Reversing journal entries
2. Enumerate, explain, and discussed the sub-processes present in each accounting processes/cycles.
Include risks and controls noted in each sub-process and determine the type of controls (Preventive,
Detective, or Corrective) (No screen shots needed but you can refer to the figure no. of the related
screen shots if presented in the succeeding answers)
Answer:
 Journalizing transactions:
 Classify business transactions by account- Each business transaction needs to be assessed
and categorized according to its classification. To identify the type of transaction, we have
to examine each business transaction. For instance, receiving a supplier invoice indicates that
we recognize a liability. Each transaction will involve two different types of accounts: one
account that is debited and one account that is credited. Transactions that have a legitimate
purpose and financial bearing on the business should only be recognized. (Preventive)
 Determine the account type involved - The chart of accounts lists different account types and
account titles that can be used in a journal entry. Choosing the appropriate account type is
crucial when using double-entry bookkeeping. If a transaction involves an account title that is
not present in the chart, we may create an account title that is more suitable to use to
represent the exchanges of values. (Corrective)
 Apply the fundamental accounting equation to the transaction - All financial transactions
must be balanced, with the total of the debits and credits always equal. We must ensure
each time we debit an account we have to credit the corresponding account. The double-
entry bookkeeping method acknowledges both the value received and the value given up in a
transaction, and this justifies the equality of debit and credit accounts. Because of the two-
fold effects of recognition, both sides of the fundamental equation will always be equal.
(Preventive)
 Journalize the transaction - In order to finish the process, we must record the transaction as
a journal entry in the appropriate journal to complete the process. We should also include the
transaction date and a short description of the transaction we are recording. All financial
transactions incurred must be accurately and fairly recorded in the books of accounts, with
sufficient detail and supported by the original documentation. (Preventive)
 Posting to the ledger

 Finalize journal entries – We must be sure to log every transaction in the journal for the
month before preparing the general ledger to avoid switching between various Accounting
books. To maintain accurate records, this pays to establish a regular schedule to post the
journal entries. This spares us from doing tiresome bookkeeping at the end of each month.
Additionally, having a fresh memory of every transaction helps in proper recording since we
still recall the context of each receipt and invoice. (Preventive)
 Post transactions to the ledger - After finalizing the journal entries, it is time to open General
Ledger to transfer these to the ledger. For each asset, liability, owner's equity, revenue, and
expense account, we have to make a separate page for every type of account. This process
is the sorting process, which entails putting each value in a specific place in accordance with
its kind, class, or nature. All of these account totals will be entered into the Trial Balance to
ensure that each journal entry is accounted for. Because we use the double-entry accounting
system, all debit and credit transactions must balance. (Detective)
 Creating trial balance

 Balance each ledger account – During the accounting period, we must determine the closing
balances of each ledger account. These closing balances will then go into the trial balance.
Before creating a trial balance, we must first ascertain the closing balances of each account
on the ledger to make sure there are no errors. The balance is the difference between an
account's total credits and debits. (Detective)
 Prepare the trial balance worksheet and fill out the worksheet - Next, the trial balance must
now be prepared by adding three separate columns. Each ledger account's name is listed in
one column, and its debit and credit amounts are in the other two columns. The total debits
or credits for each ledger account for the accounting period, as well as the names of each
account, must be filled out. We must make sure to enter the amounts in the proper column.
Debit transactions should go in the debit column, while credit transactions should go in the
credit column. If the company's ledgers are correct, the totals of the credit and debit columns
will be equal. At this point, we can determine if there are any errors in the entries.
(Detective)
 Close the trial balance - If the credit and debit columns are equal, we can now close the trial
balance. And if these columns are not equal, it is vital to determine and find the error in the
ledger. It can be simpler to recognize and correct these errors if we are aware of the typical
errors that can result in unequal credit and debit columns. The account can only be closed
once all errors are corrected. (Corrective)
 End-of-the period adjustments

 Identify the original journal entries that have been made during the period - Adjusting
journal entries are used to record transactions that have occurred but have not yet been
appropriately recorded under the accrual method of accounting. It typically relates to the
balance sheet accounts for accumulated depreciation, allowance for doubtful accounts,
accrued expenses, accrued income, prepaid expenses, deferred revenue, and unearned
revenue. Income statement accounts that may need to be adjusted include interest expense,
insurance expense, depreciation expense, and revenue. In order to create accurate financial
statements, we must create adjusting entries for the expense, revenue, and depreciation
accounts. (Corrective)
 Identify the correct account balances - Account balances change as a result of continuous
business operations without being recorded in a journal entry. Change occurs throughout
time, and in order for the accounts to accurately reflect those changes, an adjustment
process is required. Every time financial statements are prepared adjustments should be
made to accurately assign the proper amount of an account to the relevant period. Every
case will be somewhat different. Thus, we must determine the right amount of adjustment
after thorough analysis and consideration. (Corrective)
 Analyze the differences between correct and current balances and prepare journal entries to
adjust such differences - An adjusting journal entry involves an income statement account
(revenue or expense) along with a balance sheet account (asset or liability). The entries are
made under the matching principle to match expenses to the related revenue in the same
accounting period. The adjustments made in journal entries are carried over to the general
ledger that flows through to the financial statements. Failure to make adjusting entries at the
end of the accounting period may result in an understatement or overstatement of balance
sheet and income statement accounts. Businesses that adopt accrual accounting and are in a
situation where one accounting period ends and another begins should check to determine
whether there are any open transactions. So then, adjusting journal entries must be made
accordingly. (Detective)
 Creating financial statements
 Prepare income statement - Preparing an income statement involves compiling a list of
revenue, expenses, losses, and gains. Once these items are consolidated, they are organized
into categories and added together to calculate net income over the period covered by the
statement. When compiling an income statement, it is vital to make sure the correct items
and categories are included. Otherwise, business owners cannot get an accurate picture of a
company, department, or business line’s financial health for the relevant period. (Preventive)
 Prepare statement of retained earnings - The statement of retained earnings shows us the
financial health of the company and how much profit has been retained over some period. It
can also be an early indicator of potential bankruptcy. As a result, it is an important tool for
various stakeholders in assessing the health of the company. The retained earnings starting
balance must be the same as the retained earnings ending balance from the prior period. If
an accounting error is discovered in a statement, some companies make the mistake of doing
a prior-period adjustment but then not adjusting other statements to reflect the changes.
Retained earnings may be inconsistent as a result of this. (Detective)
 Prepare statement of financial position - A statement of financial position is commonly used
to assess the position of a business in terms of financial stability and potential risk. Its
primary purpose is to represent accurate and vital financial information about any company’s
equity, assets, and liabilities. It is calculated yearly and should be balanced, which means
both assets and liabilities or shareholders’ equity value should be the same. The balance
sheet is particularly important because it keeps stakeholders informed of the company’s
financial position. Keeping this information updated can help us make better management
decisions. In addition, it can help improve our operational efficiency, borrowing, and overall
financial health. (Preventive)
 Prepare statement of cash flows - The cash flow statement is an important document that
provides a wide-angle view of a company’s operational, financial, and investing activities. It is
a solid measure of a company’s strength, profitability, and future outlook of a company. With
an accurate cash flow statement, we will know the exact amount of funds we have available
at any given moment. This is vital because any plans and decisions you make must be
supported by accurate information. If we do not manage our cash flow carefully, we could be
making bad decisions that put our business at risk. (Detective)
 Closing of the books of accounts

 Identify accounts for closing - Temporary accounts are used to record accounting activities
for a certain period. It includes revenue, expenses, and dividends, and these accounts must
be closed at the end of the accounting year. Since they are reported in specific periods and
do not carry over to subsequent periods, all income and expense accounts must have a zero
balance at the end of a period. We must recognize and close all of these temporary accounts
to avoid mixing up the balances between accounting periods. (Preventive)
 Record closing entries - Closing entries are journal entries used to empty temporary accounts
at the end of a reporting period and transfer their balances into permanent accounts.
Temporary accounts are used to accumulate income statement activity during an accounting
period. Closing entries are used to reset temporary accounts so that they can start
accumulating new transactions in the following period. Or else the sums for the next
reporting period would mistakenly reflect the balances in these accounts. (Corrective)
 Creating post-closing trial balance

 List all balance sheet accounts containing non-zero balances - A post-closing trial balance is
the final trial balance prepared before the new accounting period begins. It is a list of all
balance sheet items and their balances, excluding accounts with a zero balance. It ensures
that debits and credits are still balanced after doing the closing entries. If the debits and
credit totals at the end are not equal, we will detect if there is some mistake made in
preparing the trial balance. (Detective)
 Reversing journal entries

 Identify the only types of entries that can be reversed – On accruals, all adjusting entries are
reversed. While for deferred item adjustments, only deferrals whose original entries follow
the nominal approach of recording prepayment and pre-collection are reversed. Reversing
entries can be established if prepaid expenses are recorded using the expense method and
unearned income is recorded using the income method. Meanwhile, the asset and liability
method does not reverse adjusting entries. Under the consistency principle in accounting, if
the expense method is used in one period, it must be applied consistently throughout. It is
permissible to change from one method to another as long as it is properly disclosed in the
notes to financial statements. (Detective)
 Record the reversing entries at the beginning of the next accounting period - Reversing
entries are journal entries used to cancel or neutralize entries made in the previous
accounting period. We use reversing entries to make sure the expense and revenue
transactions, which are the best indicators of the financial activities of a company, do not
have duplicate entries. Without reversing entries, the company’s books will appear far more
distorted than the actual performance. (Preventive and Corrective)
3. CREATE COMPANY PROFILE AND SET UP PREFERENCES

1.1 – 2.26
 Discuss what you learned and/or your realizations (except discussions already mention in nos. 1 & 2,
first requirement) and answer the following question:
It’s okay If no realization and additional learnings
 In setting up the company in QuickBooks and migrating information (from old database), are there
any challenges encountered? Why? Is the GUI user friendly?
Answer:
 Discuss what you learned and/or your realizations (except discussions already mention in nos. 1
& 2, first requirement) and answer the following question: It’s okay If no realization and
additional learnings
The first step we need to work on in QuickBooks is the company file since this is where
we maintain the company’s financial records and information. We have learned that every
company requires to have its company file as we cannot proceed to other steps without encoding
first the required data needed to be filled out. All of this financial information is saved and
expanded with the company file. Additionally, we came to the conclusion that QuickBooks is a
must-have software as we can save multiple company files for various businesses in QuickBooks.
After creating the company file, it will enable us to personalize QuickBooks for our business by
setting preferences that are beneficial for us.
 In setting up the company in QuickBooks and migrating information (from old database), are
there any challenges encountered? Why? Is the GUI user friendly?
Yes. We have encountered challenges in setting up the company in QuickBooks and
migrating information. There are times when we save the data we encoded or when we save
some changes, we experience some glitches, or we need to exit QuickBooks for a while. It can be
somewhat challenging for us that we must repeatedly go through this procedure countless times.
There is also no Property, Plant, and Equipment (PPE) or fixed assets module, and it does not
automatically depreciate fixed assets. In addition, we cannot sometimes modify the date to a
particular year in the past in QuickBooks, which may lead to inaccuracies and problems in the
future if it is not updated. The Graphical User Interface (GUI) is also not for beginners. The GUI
is not as simple as it seems because one wrong click might make something more complicated.
Also, the small font and icons can be troublesome for someone with an eye problem. However,
despite this, we appreciate the GUI's simplicity. After using the software, we could say that the
GUI is user-friendly but not for beginners. We only wish we were given more time to use and
explore the software.
2.19
4. SET UP CUSTOMERS, VENDORS AND ACCOUNTS

3.1 – 3.41
 In setting up the customers, vendors, and accounts, are the steps logical? Any steps of the processes
that are confusing?
Answer: In QuickBooks, steps in setting up the customers, vendors, and accounts are logical. Some
of us barely use technology that's why some features and processes in QuickBooks are confusing.
The program takes the data you enter about customers and uses it to fill in invoices and other sales
forms with your customers’ names, addresses, payment terms, and other info. Even before you
start receiving payments from customers, you’re going to do business with vendors and pay them
for their services and products. The information QuickBooks needs about vendors isn’t all that
different from what you specify for customer.
 Are the reports presentable or is there another format that you can think of to make it more
presentable? Are the options present to allow your preferred format?
Answer: The most usable and simple-to-understand reports are provided by QuickBooks. But the
types of formats and templates you prefer are limited. QuickBooks gives you easy ways to manage
your business. For example in the Customer Center, you can create, modify, and view their records,
as well as create transactions for them. The customer balance summary and the vendor balance
summary report give a basic overview of the debts and overpayments the customers and vendors
make. This report's main goal is to identify any accounting inconsistencies and irregularities.
 Is the existing chart of accounts contains the common accounting account tiles? Are there additional
common account titles that you want to add?
Answer: Nearly all of the common accounting terms are included in QuickBooks' chart of accounts.
All of your company's accounts are listed together with their balances in the chart of accounts. This
list is used by QuickBooks to keep tabs on assets, liabilities, and the inflow and outflow of cash. The
register allows you to view the transaction history for each account. You can run a brief report as
well for more information.
3.2 3.3
3.4 3.5
3.6-3.9
5. SET UP COMPANY ITEMS

4.1 – 4.43
 In setting up the company inventories, are the number of steps reasonable? Does the inventory
listing window presents the complete details without the need to scroll horizontally? Are the
important details presented properly (left to right)?
Answer: QuickBooks provides a quite reasonable number of steps in setting up the company
inventories for us to learn more about the system. It also provides a list of information that you can
pick from to customize the details you want to know in your inventory without scrolling horizontally.
Furthermore, it presented the important details properly, showing how much you earn and spend
on each good or service using QuickBooks. These goods and services can be easily added to sales
forms by entering them as items. It provides a list of every product you might offer to a client. You
receive more thorough financial reports as a result, and transactions can be completed more
rapidly. You have access to all the tools you need in QuickBooks to manage your inventory. Gain
insights into your buying and selling habits while keeping track of your inventory and getting
reminders when it's time to reorder. The Inventory Stock on Hand report offers a thorough
breakdown of your entire inventory, including a list of all items and item variations that are currently
in stock, their prices, and any out-of-stock items.
3.29-3.31 3.32
Accounts Payable of 9,000

3.39 3.40
Food Inventory
4.1 4.3
4.4 4.5
4.8-4.13 4.14
4.15 4. 19-4.33
6. SET OPENING BALANCE

5.1 – 5.38
 Are the steps easy to follow? Any issues encountered?
Answer: For someone who is familiar with accounting principles and how the accounting software
functions, learning to use QuickBooks is simple, but it might be challenging for someone who lacks
technical expertise or has no prior experience of bookkeeping. The opening balance serves as the
account's foundation. It lists every past transaction you've had up until the opening balance date. An
Opening Balance Equity account is used by QuickBooks to keep track of all opening balances for all
of your accounts. This makes it simple to review what you entered later on by going back and forth.
One of the most important things to know about the Opening Balance Equity account is that when a
file is completely and successfully set up, no balances should remain in the Opening Balance Equity
account. The Opening Balance Equity account should have a zero balance once a file is set up
correctly.
5.5 5.22-5.24
7. SET UP PAYROLL AND EMPLOYEES

6.1 – 6.39
 Discuss what you learned and/or your realizations.
Answer: Based on the information we've learned, utilizing QuickBooks Payroll to set up payroll is
quite beneficial for businesses because it may simplify the process of paying employees much
easier. We were impressed at its ability to assist in automating several related procedures. We
observed that employee information can be categorized and organized using QuickBooks payroll
software, which compiles the data needed by the organization as well as the taxing authorities.
Monitoring standard employment benefits like sick days and health insurance can also be helpful. As
a result, less labor is required for this tiresome administrative task. Assigning employee payrolls to
specific job tasks or jobs is another feature of QuickBooks payroll. This greatly simplifies the
preparation of job cost reports. The task's specifics can also be entered into QuickBooks Payroll. The
money can then be wired right into the bank accounts of the workers.
8. BACKING UP YOUR COMPANY FILE
7.1 – 7.10
 Why is it important to prepare a back-up file?

Answer: As a student, preparing a back-up file in everything we do is must, so does in QuickBooks.
We don’t know what will happen in the future. As a result, we must be ready for all the possibilities
may happen such as data loss; data loss can happen for a variety of causes, including hardware or
software malfunctions, adverse weather, human mistake, and hostile attacks. To preserve essential
files and avoid data loss in the event of a system failure is one of the key goals of data backup. Also,
businesses must maintain their accounting and financial records for the function of filing taxes, so
keeping backups of this data is crucial to maintaining the regular business operations because tax
regulatory authorities are strict about reviewing on it. As we operate and use the QuickBooks
Software, we can say that it is very convenient, however, not all supporting files are being backed up
by QB’s back-up feature. You can guarantee that all of your crucial information is secure by regularly
backing up your files. Use a backup solution to store your data, no matter what it is regularly to
guarantee its security.
BUSINESS ACTIVITIES
FOR THE MONTH OF JULY
9. CASH-ORIENTED FINANCING ACTIVITIES

Answer: After completing the previous initial set up, we were able to begin recording business
transactions for the month of July. As we fill out the data, we realized that in recording business
activities, we must know the transactions of three fundamental business activities, which financing
activities is one of it. When funds or other resources are obtained from short-term nontrade
creditors, long-term creditors, and/or owners, financing operations are started. When debts are
paid back to or otherwise resolved with the same creditors and/or owners, financing activities are
said to be accomplished.
 Based on the details that need to fill-out in QuickBooks, are the format presented enough to cover
the important details of two common types of financing activities? Please explain the two common
financing activities mentioned.
Answer: On July 6, the company sold 1,000 shares of common stock to Board Investments, which is
a new private investor, we found it easy to fill-out the transaction in QuickBooks, since the format
presented enough the important details. As we finally completed to record it, this means that, funds
were deposited directly into the company’s checking account on the same date on their check, so
there is an equity capital. On July 8, the company borrowed 25,00 from Bank of America, so this
means there is a debt. Still, the format is presented enough to cover it. After recording the
transaction, on the same date that the long-term loan payable was signed, Bank of America's check
number 823908 was promptly deposited into the business' checking account.
10. CASH-ORIENTED INVESTING ACTIVITIES
 Based on the details that need to fill-out in QuickBooks, are the format presented enough to cover
the important details of two common types of financing activities? Please explain the two common
financing activities mentioned.
Answer: Yes, based on the information that needs to be filled out in QuickBooks, the format given
sufficiently covers the essential aspects of two common types of financing activities, namely, the
issuance and repurchasing of equity and the borrowing and repayment of short-term and long-term
debts. The information showed both the kind of account from which the funds were transferred to
the business's account as well as the date on which the transaction took place. In addition to this, it
provided information regarding the origin of the money or the sort of financing activity from which
it was collected. In general, there is enough information to cover all of the important details that
were needed for the finances to work.
 Why is the tab labeled expenses even though the purchased items are assets?
Answer: As soon as a piece of equipment is purchased by the business, it will be recorded as an
expense on the Furniture and Equipment Account and deducted from the cash account balance. It
was written off mostly because checks are used to pay vendors for purchases, which means the cash
balance account will be lowered.
11. CASH-ORIENTED OPERATING ACTIVITIES – SALES
Answer: Despite the fact that a few steps are somewhat unclear, we were able to follow them all
and get the necessary outcome. If you are able to follow the steps precisely, everything will proceed
without a hitch.
12. CASH-ORIENTED OPERATING ACTIVITIES – PURCHASES
Answer: Yes, the steps are easy to follow. Cash-based operating activity sales and cash-based
operating activity purchases involve the same primary procedures. In the case of purchases,
however, we had to generate purchase orders that demand a great deal of information to be filled
out. It was partially difficult, particularly the process, because there were not just one but too many
windows. From preparation of orders, receipt of orders, and payment of invoices.
13. CASH-ORIENTED OPERATING ACTIVITIES – EXPENSES
Answer: In this part, we learned to keep an eye out for the expenses of the company by paying
attention to items like rent, machinery, inventory costs, marketing, payroll, insurance, step charges,
and cash designated for research and development. Managing operating cash flow -expenses is one
of the most important because it analyzes and determine the business spending, this makes it
possible for businesses to monitor cash inflows and outflows.

Answer: The steps are easy to follow because there are guidelines that are easy to understand and
follow. It help us to have an accuracy for the data of the expenses such us payrolls and rents. After
following the steps, there are no issue that we’ve been encountered.
14. GENERATION OF BALANCE SHEET, INCOME STATEMENT, AND TRANSACTION LISTINGS
It’s okay If no realization and additional learnings.
Answer: This time, the generation of balance sheet, income statement and transaction listings, it
gives us the snapshot of the business financial statements during the particular period. It represents
important information regarding the financial performance and health of a business. This
statements are used by investors, market analysts, and creditors to evaluate a company's financial
health and earnings potential.

Answer: The steps are easy to follow and there's no issues we've been encountered.
 Are the formats presentable and complete with important details?

Answer: Yes, as we can see in the data, it is presentable and complete for example the balance
sheet organized in current assets, non-current assets, current liabilities, non-current liabilities and
equity. As well as the income statement we can easily determine the expenses, cost of good sales,
gross profit and net income.

QuickBooks Accounting Cycles

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QuickBooks Accounting Cycles

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Republic of the Philippines

CARLOS HILADO MEMORIAL STATE UNIVERSITY

QuickBooks Final Output

 Posting to the ledger

 Creating trial balance

 End-of-the period adjustments

 Closing of the books of accounts

 Creating post-closing trial balance

 Reversing journal entries

3. CREATE COMPANY PROFILE AND SET UP PREFERENCES

4. SET UP CUSTOMERS, VENDORS AND ACCOUNTS

5. SET UP COMPANY ITEMS

Accounts Payable of 9,000

6. SET OPENING BALANCE

7. SET UP PAYROLL AND EMPLOYEES

 Discuss what you learned and/or your realizations.

8. BACKING UP YOUR COMPANY FILE

 Why is it important to prepare a back-up file?

FOR THE MONTH OF JULY

9. CASH-ORIENTED FINANCING ACTIVITIES

10. CASH-ORIENTED INVESTING ACTIVITIES

11. CASH-ORIENTED OPERATING ACTIVITIES – SALES

12. CASH-ORIENTED OPERATING ACTIVITIES – PURCHASES

13. CASH-ORIENTED OPERATING ACTIVITIES – EXPENSES

 Are the steps easy to follow? Any issues encountered?

14. GENERATION OF BALANCE SHEET, INCOME STATEMENT, AND TRANSACTION LISTINGS

 Are the steps easy to follow? Any issues encountered?

 Are the formats presentable and complete with important details?

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