« November 2010 | Main | January 2011 »

5 posts from December 2010

QuickBooks 2011: Release 4 Now Available

If you are using QuickBooks 2011 Pro, Premier or Enterprise, you will want to take time to download and install the latest release (R4).

This release fixes a number of bugs and concerns that have been present in this latest edition of QuickBooks software, including:

  • The big problem that many businesses encountered in using the Item QuickReport that did not show an accurate on-hand quantity.

This problem, along with a host of others has been fixed. See a complete list of all the fixes and updates found in Release 4 for QuickBooks 2011.

To install release 4, either:

  • Tell QuickBooks to "Install Now" if you see a message indicating an update has recently been downloaded when you log into QuickBooks 
  • Click Help > Update QuickBooks, then click the Update Now button and follow the prompts.



Loan Principal Payments Should NOT Show Up on Your Profit and Loss Report

A very common problem I see in QuickBooks files is this...

  1. A business takes out a bank loan.
  2. Monthly payments are made on the loan
  3. The entry in QuickBooks to record the payment is wrong, with the end result being the distortion of the profit and loss report (in some cases, a BIG distortion) and a distortion of the balance sheet report (which shows what a business owns and what it owes).

Some accounting concepts you need to know...

  • Every monthly payment to the bank includes some loan principal and also interest (unless it is an interest only loan - if so, that is not the topic of our discussion).
  • The only portion of that monthly payment that qualifies as an expense to the business is the interest portion. No matter how much you want it to, the repayment of the principal is NOT an expense of the business and should NOT show up on your profit and loss report.
  • The bank (or your tax CPA) should provide you with what is called an "amortization table" (now there is a mind-numbing term if ever there was one!) that details out how much of each payment is principal and how much is interest. Having this information makes the monthly entry in QuickBooks a snap.


Let's say that your business is making monthly payments of $250 on its' loan. To keep our example very simple, let's also say that the bank has told you that of each $250 payment, $35 is interest and $215 is principal (the reality is that the interest portion usually decreases over time and the principal portion increases).

When you write the check in QuickBooks to record this payment, three things need to happen:

  1. The balance of your bank account will decrease by $250
  2. The balance of your bank loan will decrease by $215 (not $250), the principal portion of the payment. If the loan was set up properly, you should have an account in your chart of accounts in the "long term liability" section called "Bank Loan"
  3. Your interest expense will increase by $35. This $35 should show up as "Interest Expense" on your profit and loss report.

What I often see is this - the checking account goes down by $250 and the interest expense goes up by $250. Not correct at all.

So, in accounting-speak, to recap the above, you have a credit to your checking account for $250, a debit to your bank loan liability account for $215 and a debit to your interest expense account for $35. Voila - your debits and credits equal!


If any of the discussion above gives you a headache, it is essential that you run (do not walk) to a QuickBooks expert to get your loans and loan payments set up properly.

Naturally, the more loans (and various types of loans) a business has, the more complicated this process can get.

In a future post, I'll discuss the QuickBooks Loan Manager that may help simplify the administration of your bank loans.



New QuickBooks Webinar: "15 Tricks and Tips Every User Must Know"

Start the new year off the right way and boost your QuickBooks knowledge!

Attend my webinar, and you'll benefit by:

  • Building your confidence with your favorite accounting software
  • Working more efficiently with QuickBooks each day
  • Understanding critical behind the scenes information in QuickBooks that is vital to your success
  • Identifying potential problem areas that can really cause grief if not handled correctly


One lucky attendee will win a copy of QuickBooks Premier 2011 software for use in their business (a $400 value!). This CD contains the Contractor, Manufacturing/Wholesale, Non-Profit, Retail and Professional Services editions of QuickBooks 2011 - you simply select which version you prefer.


No worries - register for the webinar anyway. It will be recorded for later playback at your convenience.


Use promo code = newyear to save on your webinar registration fee. Hurry! This promo code will run for a limited time only.

More details and registration information on my upcoming QuickBooks webinar.



How to Sort a Customer List in QuickBooks

Make sure to take advantage of this tip when it comes to sorting your customer list (it also works with your vendor and item lists too!) in QuickBooks:





QuickBooks Enterprise 2011: Consolidating and Combining Reports

QuickBooks Enterprise 2011 offers you the capability not found in other versions of QuickBooks (Pro and Premier) - to combine reports from multiple QuickBooks data files.

This feature is found by clicking Reports > Combine Reports from Multiple Companies and a screen like this appears:

Combine Multiple Companies for Reports

Once here, you have the ability to combine:

  • Balance Sheet Standard
  • Balance Sheet Summary
  • Profit and Loss Standard
  • Statement of Cash Flows
  • Trial Balance
  • Profit and Loss by Class (new in 2011)
  • Sales by Customer Summary (new in 2011)

Once you select the reports you want to combine, simply select the date range, the format of the report (accrual or cash) and click the Combine Reports in Excel button.

Each combined report is then created as its' own separate sheet within Excel and you can work with the data at that point just like any other Excel file.

Call_to_action-enterprise 3