QUICKBOOKS ASSIGNMENT

How do electronic accounting packages help people manage a business?

Task 1 – Concept Map:

Categories Examples

1 Assets (own)

FIXED COSTS

Land, car/boat, house, computer

2 Liabilities (owe)

VARIABLE COSTS – long term

Loan, rent, council rates

3 Expenses

short term

Staff, electricity, advertising, insurance

4 Revenue Price x quality

Exercise 1, Excel Test

Item Classification Y/N Reasoning

Rent Liability X - Expense gets used up

Electricity Expense

Car Asset

House Asset

Mortgage Expense X - Liability fixed cost/long term

Computer Asset

Rubber Expense

Land Asset

Wages paid Liability X - Expense variable cost/runs out

Salaries paid Liability & Liability business choice

Distribution costs Liability X - Expense variable cost/runs out

Sales Revenue

Commission Received Revenue

Reputation Asset

Bridge Asset

Broadband network Asset

Repairs to broadband Expense

Insurance Expense

Capital Asset X - Owners equity

A4 paper Expense Definitions: Asset – something that is owned and is a fixed cost Liability – something that is owed, is a variable cost and usually long term (+ 5years) Expense – something that is paid, usually short term Revenue – something that is paid but are used up/run out Owner’s equity – owners investment in the business

Exercise 2, Balance Sheet:

Exercise 3, Classification

1) Classify each of the following items as either an asset, liability, owner's equity, revenue or expense

Item Classification Why?

Cash Asset Something that the business owns

Bank account Asset Money is something that the business owns

advertising expense Expense Variable cost and is used up in the short term

land Asset Something that the business owns

stock Asset Something that the business owns

fee income Revenue Money coming in to the business

sales Revenue Money coming in to the business

car loan Liabilitity Money owed to someone else over the long term

capital Owner's equity money invested into the business by the owner

supplies expense Expense supplies are purchased and then used up - also VC

rental income Revenue money coming in to the business

wages expense Expense Variable cost and is used up in the short term

mortgage Liabilitity Fixed cost and paid over the long term

motor vehicle Asset Something that the business owns

electricity Expense VC paid in the short term and is used up

accounts receivable Asset Money owed to the business by customers

account payable Liabilitity Money the business owes to other businesses paid in the

Use the following information to complete a balance sheet for Super Car's Business (owned by Jaimie)

1 Jaimie invested $300000 into the business

2 Paid $70000 to buy a car with cash

3 Purchased $2000 worth of stock on credit

4 Paid $1500 cash to suppliers to reduce Accounts Payable

5 Purchased $5000 worth of stock on credit

6 Purchased a delivery van on credit worth $30 000

7 Jaimie withdrew $5000 cash and put it in his personal bank account

8 Purchased furniture on credit worth $ 6250

Assets Liabilities and Owner's Equity

Bank 187250 Capital 297000

Car 70000 Credit 5000

Stock 7000

Accounts payable 1500

Van 30000

Furniture 6250

302000 302000

long term

drawings Owner's equity Owner withdrawing some of their initial investment out of the business

rental expense Expense Paid in the short term and is used up

stationery Expense VC and used up in the short term

Exercise 3, Assets, Liabilities and Owners Equity

Assets Liabilities Owners Equity

56000 8000 * 48000

*40500 24000 16500

42800 *36050 6750

*101900 12300 89600

18200 16700 *1500

Exercise 4, Class Balance Sheet

SEXY BOY INDUSTRIES

Assets Liabilities + OE

Bank 5000 Bank loan 50000

Stock 5000 Car loan 5000

Shop 50000

Car 50000

Capital 10000

60000 60000

Exercise 5, Peter Smiths Balance Sheet

Show the following transactions in the balance sheet on the right.

The first transaction is done for you.

Date Transaction

Feb-01 Jaimie invested 300000 into the business

Feb-02 Paid $150000 cash to buy a building for the business

Feb-08 Purchased $1700 stock on credit

Feb-13 Paid $900 off Accounts Payable

Feb-16 Purchased land worth $180000 with a bank loan

Feb-19 Paid $750 off Accounts Payable and $280 for more stock

Feb-24 Owner withdrew $2000 cash.

Balance Sheet of Peter Smiths Business:

Assets Liabilities + Owner's equity

Item Amount Item Amount

Bank 146070 Capital 300000

Building 150000 Accounts Payable 50

Stock 1980 Bank Loan 180000

Land 180000 Drawings -2000

Total Assets 478050 Total L and OE 478050

Situation: As an employee for a company, Fuzzy Finance that offers training for workers of large organisations it is my duty to offer a course for these recruiters. QuickBooks is one of the courses that is provided. Problem: I have been assigned the duty, from the Finance Manager of Fun Facts, of designing a demonstration activity that can be used to provide education to an employee who has no knowledge of QuickBooks. Task 2 – Plan:

Task Due Date x Progress Check/Changes made

Assignment distributed 4 June x I did not attend school this day so therefore, the assignment was received on the 5 June.

Task 1 11 June x During this week various exercises were also completed in order to practice and understand how balance sheets work and are collated. Microsoft Excel was used for these tasks and spreadsheets.

Task 2 12 June x

Task 3 16 June x

Task 4 18 June x The investigation section was completed on the 17 June. This allocated extra time to complete the next task/section for the assignment. *Investigation Progress Check - deadline met

Task 5 6 July

Task 6 13 July

Task 7 16 July

Task 8 31 July

Task 9 3 August

Task 10 6 August

Task 11 11 August

Hand in Assignment 13 August

This calendar was used to predict the

dates to write the process journals/plan

so that I knew exactly what the date

was and could document them more

accurately.

Task 3 – Design Brief: This assignment involves the investigation of Financial Management and how it relates to the collection, organisation and interpretation of financial information in order for effective decision making within a business. It is evident that using computerised accounting applications does not necessarily require a great understanding of accounting. However, it does entail practice in the use of a range of procedures and is regularly a challenging task for a new recruited worker to understand and comprehend the accounting system as well as fulfil their other responsibilities. Hence, I have been contacted by Mr Eroom, the Finance Manager of Fun Facts which is a large renowned book store on the Gold Coast. He has requested that I provide his new employees with a demonstration activity that can be used to provide instructions to the workers that have no understanding of the program QuickBooks. Mr Eroom appears eager to hire my firm to provide a complete four week QuickBooks tutorial. However, he is hesitant to pay the full cost of $10,000 unless provided with a sample of a demonstration lesson that shows the quality of my instructional materials. Mr Eroom has provided me with some requirements that the introductory exercise must include for him to consider using the course. These requests include the following;

At least twenty different transactions

Cash, credit and cheque transactions

Capital contributions

Both assets and expense purchases

Sales recipes

Payments by instalment

Collections from debtors and creditors

Work solutions with a) a complete list of transactions b) a profit and lost statement c) a balance sheet

The materials provided for the task include A4 paper and the resources and tools (equipment) eligible for use is the QuickBooks program and Word Processing Applications such as Microsoft Word for displaying the final assignment and Microsoft Excel for completing practice exercises and balance sheets. Task 4 – Research:

a) What are expenses? An expense is the amount/s paid for goods and services that may be currently tax deductible. Anon, 2009. WordNet Search. [Internet] Available: http://wordnetweb.princeton.edu/perl/webwn?s=expense [Accessed 17 June 2009] Anon, 2008. Expenses.[Internet] Available: http://www.co.washoe.nv.us/repository/files// [Accessed 17 June 2009]

b) What are capital purchases? Capital purchases include; business assets purchases such as machinery, cash registers, computers and cars (these items are also referred to as plant and equipment, and land and buildings. These assets can be new and may be imported. Things that are not capital purchases include; trading stock, normal running expenses such as stationery and repairs, or equipment rentals or leases. Australian Government, 2009. What are Capital Purchases. [Internet] Available: http://www.ato.gov.au/businesses/content.asp?doc=/content/42132.htm&page=48&H48 [Accessed 17 June 2009] FinancialStability.gov, 2009. Capital Purchase Program. [Internet] Available: http://www.financialstability.gov/roadtostability/capitalpurchaseprogram.html [Accessed 17 June 2009] University of Calgary, Financial Services, 2009. Financial Services. [Internet] Available: http://www.ucalgary.ca/financial/controller/asset_management/capital

[Accessed 17 June 2009]

c) What is a sales revenue? Income from sales of goods and services, minus the cost associated with things like returned or undeliverable merchandise.

Nelson, T. (2006) Nelson Business Education. Victoria: Nelson Australia Pty Limited. Moneychimp, 2009. Sales Revenue. [internet] Avialable: http://www.moneychimp.com/glossary/sales_revenue.htm [Accessed 17 June 2009]

d) What is Goods and Services tax? The Goods and Services Tax (GST) is a broad-based tax of 10 per cent on the sale of most goods and services and other things in Australia. You must register for GST if; your business has a GST turnover of $75 000 or more ($150 000 or more for non profit organisations), you provide taxi travel as part of your business, regardless of your GST turnover. By registering for GST, you will be entitled to claim input tax credits for the GST included in the price paid for things that you acquire for use in your business. If you are not registered, you will not be able to claim input tax credits. Australian Government, 2008. How GST works. [Internet] Available: http://www.ato.gov.au/businesses/content.asp?doc=/content/25378.htm [Accessed 17 June 2009] Business.gov.au, 2009. Goods and Services Tax.[Internet] Available:http://www.business.gov.au/Business+Entry+Point/Business+Topics/Taxation/Taxes+explained/Goods+and+Services+Tax.htm [Accessed 17 June 2009]

e) What are Capital contributions? A Capital contribution is a contribution that increases the equity capital for a company, but does not increase the amount of outstanding shares.

InvestorWords.com, 2008. Capital Contributions. [Internet] Available: http://www.investorwords.com/6437/capital_contribution.html [Accessed 17 June 2009] Murray, J. 2009. Capital Contribution. [Internet] Available: http://biztaxlaw.about.com/od/glossaryc/g/capitalcontrib.htm [Accessed 17 June 2009]

f) What is difference between cash, credit and cheque transactions? A cash transaction uses currency (dollars and cents) to pay for products or services. A credit transaction means that you are posting the transaction to a credit card or loan. In this case, the merchant gets paid (often the next day) for products or services rendered, and you pay the loan issuer or credit card company back. Sometimes, there are fees involved (a percentage of the transaction amount) to use a credit card - especially if you don't pay the issuer back within the established terms, which is called interest and finance charges. Bargaineering, 2009. Cash, Cheques or Credit. [Internet] Available: http://www.bargaineering.com/articles/cash-cheques-or-credit-when-traveling-internationally.html [Accessed 17 June 2009] Queensland Professional Credit Union, 2009. Fees and Charges and Free Services. [Internet] Available: http://www.qldprofcu.com.au/Doc/Fees%20and%20Charges.pdf [Accessed 17 June 2009]

g) What is the difference between payments by instalments, debtors and creditors? Instalment orders An instalment order allows you to pay off a debt in set amounts at set intervals. You can get separate instalment orders to pay off a number of debts. These orders can help you, but the process can also be used to wear you down and increase costs if you cannot manage the payment. Debtors and creditors can both apply for instalment orders. Debtor applications

If you have looked at your finances and decided that you can afford to repay a certain amount of money, applying for an instalment order may have some advantages for you. Once the creditor gets the instalment order they must stop trying to get money from you until the court makes a final decision. If a court grants your application for an instalment order, and you keep making the payments, the creditor cannot take any other action. The creditor can apply for the order to be changed or cancelled if; there is a substantial improvement in your ability to pay or it can be proved that you gave inaccurate information to the court. Creditor applications A creditor who has a judgment for a debt can also apply for an order forcing you to repay a debt by instalments. A creditor would be likely to do this because payment over time is better than no payment or irregular payment. Commonwealth of Australia, 2007. Debtors and Creditors. [Internet] Available:http://westone.wa.gov.au/toolboxes/bookkeeping/toolbox11_06/units/account_systems/html/accruals_debtors_casestudy.htm [Accessed 17 June 2009] Victoria Legal Aid, Lawyers and Legal Services, 2009. Instalment orders, Debtor applications and Creditor applications. [Internet] Available: http://www.legalaid.vic.gov.au/1786.htm [Accessed 17 June 2009]

h) What is the difference between profit and loss?

Profit and loss accounts are accounts compiled at the end of an accounting period to show gross and net profit or loss. Income statement, also called profit and loss statement (P&L) and Statement of Operations, is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. Brennan. M, 2009. Glossary of Business Terms. [Internet] Available: http://www.swantower.com/marie/essays/business/glossary.html [Accessed 17 June 2009] Anon, 2009. Profit and Loss. [Internet] Available: http://wordnetweb.princeton.edu/perl/webwn?s=profit%20and%20loss [Accessed 17 June 2009]

i) What is the different between assets and liabilities? Assets and Liabilities, terms used in economics and accounting. Assets represent property or rights to property and liabilities are debts owed to others. Assets and liabilities together determine the wealth of an individual, a firm, or a nation.

Encarta, 2009. Assets and Liabilities. [Internet] Available: http://encarta.msn.com/encyclopedia_761579934/assets_and_liabilities.html [Accessed 17 June 2009] Le Moine. J, 2004. Accounting Advice: Assets, Liability and Equity. [Internet] Available: http://www.lemoineandjames.com/gaap/22ale.html [Accessed 17 June 2004]

Task 5 – Design Specification: As an employee for Fuzzy Finance, it is my duty to provide a training course for employees for successful organisations. The Finance Manager of Fun Facts, Mr Eroom has contacted me and requested that I create a complete four week QuickBooks tutorial. However, he is hesitant to pay the full cost of $10,000 without a demonstration activity that can be used to provide instructions to an employee who has no knowledge of the QuickBooks program. After researching various aspects of balance sheets and discovering the workings of the program I now have a better understanding of how to approach the task which has increased the achievement of the outcome.

It has been revealed that there has been a rapid increase in the last decade in the number of businesses using computerised accounting applications to document and organise financial data such as sales an expense transactions and calculation of the assets and debts of the firm. The reasoning for the dramatic increase of using this approach is because the applications provide standard systems of categorising economic transactions and will automatically assemble the statistics to product financial reports essential at the end of the financial year. From the research is can be evident that the demonstration activity produced must be efficient, understandable and engaging in order for the instructions it provides to be understood and interesting to follow. The example transactions must be relevant and significant for a bookstore worker which will enable the user to relate to the situations and become more comfortable recording the types of transactions they may encounter. This approach will allow the employee to practice manoeuvring the amounts of cash in situations that they are presumably to come to terms with during their career. The information the demonstration activity displays must be understandable, easy to comprehend and follow. Therefore, the instructions it offers must be shown using a program that allows the user to manoeuvre to the different steps, hence, Microsoft PowerPoint will be used. This program will allow the employee using the demonstration activity to easily convert from one step to another by using the slideshow features. This program also allows images to be inserted in the slides which enables the user to view the steps visually that have to perform in order to complete that particular transaction. Research has shown that some people understand directions more clearly if they are displayed visually rather than reading the steps, this form of presenting the information will therefore appeal to more people increasing the success of the tutorial. Another requirement the QuickBooks tutorial should entail that was discovered from the research collated, is that the employees using the demonstration course book need to understand the difference between assets, liabilities, revenue, expenses and owners equity. This will ensure that the employees learning to use the QuickBooks program understand where to put the cash amounts. Ensuring that they recognize these distinctions will result in the success of the balance sheet and later the business. NEEDS Business 1 (Fuzzy Finance):

- The company I work for needs to supply an efficient QuickBooks demonstration activity for the company, Fun Facts employees. The success of the course will be determined by the detail the information is displayed in and also how easy it is to comprehend when translating the instructions on the QuickBooks program.

- The tutorial that the business provides needs to meet the needs of the intended buyer in order for the company to make a profit.

Business 2 (Fun Facts): - The consumer business, (the business interested in purchasing the product) Fun Facts needs to have a

tutorial of how use QuickBooks. The business must also feel confident that the product purchased is successful and works.

Employers: - The employers need to be able to trust that the QuickBooks course is efficient and teaching their

employees how to use the program. The employee’s accuracy will determine the success of the business and result in the profit the company receives from the customers.

- The employers need to know that the course demonstrates the right information and is teaching the employees instructions that will be used during their working careers. The employer’s satisfaction with the tutorial will ensure that the company continues to use Fuzzy Finance’s training programs and therefore, making a profit for Fuzzy Finance.

Employees: - The employees need to be able to use the functions easily and properly to create balance sheets using

the QuickBooks programs in order for them to do their job properly. Their accuracy will determine how trustworthy the business is and impact on the profit the business makes.

Customers: - The customers need to have suitable and precise balance sheets as their money is of great value to

them.

- Customers need to know where they are spending and saving their money, which essential for all financial planning even when purchasing books. The customer’s satisfaction entailing the balance sheets accuracy will determine their decision on continuing to buy from the store. This factor will contribute to the profit the business makes as the amount of customers purchasing books will verify the amount of money coming into the business.

TESTING The demonstration QuickBooks course will be tested by inviting members of the public to trial the tutorial. Two participants will be asked to follow the instructions provided by the QuickBooks tutorial and use the information to complete a balance sheet. The success of the demonstration activity will be determined on whether the participants can comprehend the information and correctly collate a balance sheet according to the scenario provided. The tutorial will be successful if the balance sheet displays the correct amounts under each appropriate heading and therefore, the course will be appropriate for employees at Fun Facts to use and meet the requirements set forth by the Finance Manager Mr Eroom.