QuickBooks 2011 offers the ability to exclude Estimates, Sales Orders and Purchase Orders from the Closing Date lock. This is a key piece of functionality that will be attractive to contractors and other business types who often have open Estimates, Sales Orders or Purchase Orders; which I just learned about yesterday in a “New Features in QuickBooks 2011” webinar presented by Joe Woodard.
The Closing Date feature in QuickBooks is designed primarily to protect transactions from previous reporting periods from being changed – for example, it is often a general practice for an accounting professional to set a closing date in a clients QuickBooks file after they have finished preparing their tax returns. Setting a Closing Date allows the accountant to know that the client cannot go back and make changes to transactions that would impact the tax returns that were filed.
Unfortunately, the Closing Date feature works as a “lock”; and effectively prevents a user from making changes to open “non-posting” transactions such as Estimates, Sales Orders, and Purchase Orders.
It’s common in the construction industry to have Estimates that remain open for 6 months to sometimes several years – depending on the size of the job, when they were awarded the contract, and even when they actually start to work on their piece of the project.
With previous versions of QuickBooks, a business owner who utilized these types of non-posting transactions could not use this feature until AFTER the transactions had been closed (Estimate fully invoiced, Sales Orders fulfilled, or Purchase Order completely received); however, their accountants would frequently enter a closing date when they were finished with the tax return.
This caused a lot of hassle and additional work for the business owner. They would need to create a 2nd Estimate in it’s entirety and then create a single progress invoice billing out everything that they had billed up until the time that their books were “closed” by their accountant – they then had to set the invoice as “Mark as Pending” so that it wouldn’t show up in their Accounts Receivable.
With QuickBooks 2011, you can now choose to exclude these open, non-posting transactions when you set a closing date!
If you are a QuickBooks user be sure to tell your accountant about this feature, and if you are an accounting professional, ask them if they need access to these transactions BEFORE you set the closing date, they’ll love you for it!
This option is available from the Edit menu -> Preferences -> Accounting -> Company Preferences tab -> click on the Set Date/Password button -> then check the option to “Exclude”.
Right click on the image to enlarge it.
To some this will seem like a small and perhaps unimportant change; but for some it will be a HUGE improvement in the functionality.
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QuickBooks automatically prefills the date field in every transaction you create (Enter Bill, Write Checks, Create Estimate, etc.) and report that you generate. You should always verify that the date specified by QuickBooks is the correct date for the particular transaction or report.
In many cases, the date that QuickBooks provides you with is not the correct date that you need. Additionally, you should verify that you are not posting transactions to a date in a period that has been “closed”. Unfortunately, QuickBooks allows users to post new transactions to a prior period if they have access to change or delete transactions recorded before the closing date.
Report Dates
Every QuickBooks report automatically specifies a default date range each time the report is created. You should always verify that the default date range is correct.
You can change the date range by:
- Selecting a different preset date range (e.g., today, this month, this fiscal quarter, this fiscal year-to-date, last fiscal year, etc.) from the “Dates” drop-down list at the top of the report.
- Entering a time period not specified by one of the preset date ranges in the “From” and “To” fields at the top of the report, by entering the dates manually or by clicking the calendar symbol to the right of the dates and then clicking the arrows on the calendar to select the applicable month and year and then clicking on the applicable day.
NOTE: You should click the “Refresh” button at the top of the report after changing the date range. *
Check Dates
QuickBooks allows users to pay bills or write checks on a particular day but not print the checks until a subsequent day. In that case, QuickBooks automatically prints the payment date specified in the “Pay Bills” window or the date specified in the “Write Checks” window as the check date.
Users can print the actual check date by selecting “Preferences” from the “Edit” menu and then selecting “Checking” from the “Preferences” scroll box. Users then should check the “Change check date when check is printed” box in the “Company Preferences” tab.
Changing Source Documents
QuickBooks allows users to correct or otherwise change transactions by changing source documents (such as bills, checks, invoices, etc.). In fact, many of the QuickBooks help screens and user guides encourage users to correct transactions simply by changing the source document. Consequently, many QuickBooks users change source documents when a more accurate method for changing a transaction should be followed.
For example, many users change Estimate or invoice amounts in QuickBooks rather than issuing credit memos to their customers. Likewise, many users change bills that have been entered in QuickBooks rather than entering vendor credits as negative bill amounts. In addition to changing amounts on source documents, QuickBooks users also may change accounts, dates, or other information after the transaction has been posted. When users alter source documents, QuickBooks retains a record of the change with the audit trail feature. Practitioners should encourage their QuickBooks clients to enter new transactions (such as credit memos) or record journal entries when applicable rather than changing source documents.
Accounts Receivable and Accounts Payable
QuickBooks requires that a “Customer:Job” be specified in journal entry postings to accounts receivable and accounts payable. Consequently, practitioners who wish to make correcting entries to accounts receivable or accounts payable without correcting individual customer or vendor accounts often specify the “Customer:Job” as “dummy” or “adjusting.” While that practice may be a quick and efficient way to adjust the accounts receivable or accounts payable balance, the authors caution that the adjustment method will result in incorrect individual customers and vendors accounts. The practitioner should advise his or her clients that the individual customer and vendor accounts will be incorrect.
*Users can choose a personal preference that automatically refreshes reports. To turn on that preference, select “Preferences” from the “Edit” menu. Select the “My Preferences” tab under “Reports & Graphs” and then select “Refresh automatically.”
