Preferences That Affect Accounts Payable
Did you know that you can streamline accounts payable processes by setting certain QuickBooks preferences? Setting preferences saves keystrokes, which, in turn, can save data entry time.
Not every preference that affects accounts payable impacts your financials; some preferences enable specific features. To view and modify these QuickBooks settings, from the menu bar, select Edit, Preferences.
Preferences in QuickBooks come in two forms:
- My Preferences—Settings that are unique to the current user logged in to the data file and that other users do not share. Click the My Preferences tab to modify the user-specific settings for the logged-in user.
- Company Preferences—Settings that are common to all users. Click the Company Preferences tab to modify settings globally for all users.
The following sections detail the preferences that can affect your use of the accounts payable functionality.
The Accounting preferences are important to review when you first create your data file. These choices affect much of how your accounting information is recorded in accounts payable.
Company Preferences are shared globally by all users. The Accounting preferences include the following:
Accounts—These settings are important for proper management of recording revenue and expenses. The following are the preferences settings for Accounts:
- Use Account Numbers—If enabled, this setting requires the use of an account number in addition to the account name when creating a new chart of account list item. Users can type either the number or the name when referencing an account on a transaction line.
- Show Lowest Subaccount Only—You can choose this option if account numbering is enabled and all the chart of account items have a number assigned. This setting changes how the account name is displayed. If you see an “other” named account on your financials, users recorded a transaction using the parent account and not one of the available subaccounts.
- Require Accounts—Use this option to determine whether QuickBooks displays a prompt when you forget to choose an account on a transaction line. If you leave the option turned off, QuickBooks assigns the transaction to Uncategorized Income or Uncategorized Expense. When you create a new data file, this default is automatically selected.
- Use Class Tracking for Transactions—Classes in QuickBooks provide a secondary means of grouping transactions, such as into profit centers. The optional Prompt to Assign Classes selection enables you to enforce class tracking in a similar way as the Require Accounts option. See the QuickBooks Help menu for more information on how you can use class tracking to track multiple profit centers on your income statement and for some balance sheet accounts.
- Automatically Assign General Journal Entry Number—This preference automatically sequentially numbers any general journal entries. You can modify each entry number at the time of input.
- Warn When Posting a Transaction to Retained Earnings—You can post to the Retained Earnings account, but you don’t want to because QuickBooks uses this account at year’s end to close out the year’s Profit or Loss totals. Note that, when creating a new data file, this option is enabled by default.
- Date Warnings—When you create a new data file, the default date range set is from 90 days in the past to 30 days in the future, calculated from your current computer system date. Users can modify these date ranges, and QuickBooks warns users when they enter or modify a transaction outside these dates.
- Closing Date—The Admin or External Accountant user login can set a date so that transactions cannot be modified, added, or deleted prior to that date without having permission and entering the closing date password (if one was created).
My Preferences are unique to the username currently logged in to the data file. These settings are not shared globally.
- Autofill Memo in General Journal Entry—When this is selected, QuickBooks repeats the memo detail from the first line in the journal entry to all other lines in the same journal entry.
Review your Bills preferences to determine whether the defaults QuickBooks set are appropriate for your company’s needs.
All users share Company Preferences. The following are the Bills preferences:
- Entering Bills, Bills Are Due—Specifies the default number of days vendor bills should be paid within. You can change this global default on each vendor’s record information or on a specific transaction. By default, QuickBooks sets the default due date for bills (when a vendor record does not have payment terms set) to 10 days. Users can modify this for their company’s specific bill-paying terms.
- Warn About Duplicate Bill Numbers from Same Vendor—Ensures that you don’t enter the same bill twice. This safeguard is an important reason for entering bills first instead of skipping a step and instead using the Write Checks transaction type when you pay vendors.
- Paying Bills, Automatically Use Credits and Discounts—Enables QuickBooks to apply any unapplied credits or discounts to your vendor bill payments automatically if your vendor is set up with discount terms and the bill is being paid within the discount date defined. Be sure to select your preferred chart of account for recording these credits.
You cannot set any My Preferences in the Bills section.
Review and set preferences for the Calendar view for upcoming transactions.
You cannot set any Company Preferences in the Calendar preferences.
My Preferences are unique to the username currently logged in to the data file. These settings are not shared globally. For Upcoming and Past Due Settings, you have these options:
- Display—Choose from Hide, Show, Show Only if Data Exists, and Remember Last.
- Upcoming Events & Past Due Settings—Set the default to show upcoming and past-due data.
The Checking preferences improve the accuracy of your day-to-day data entry. Be sure to review them when setting up a new data file.
All users share the Company Preferences. The following are the Checking preferences:
- Print Account Names on Voucher—The default is to print the General Ledger account when using the Write Checks transaction. General Ledger accounts do not appear on checks printed via the Pay Bills transaction.
- Change Check Date When a Noncleared Check Is Printed—If you choose to have a check or bill payment printed later, this setting changes the check date to the current system date when you print the checks.
- Start with Payee Field on Check—This time-saving option places your curser in the Payee field when you use the Write Checks transaction type.
- Warn About Duplicate Check Numbers—QuickBooks warns you if the user is using a check number that the system has already recorded.
- Autofill Payee Account Number in Check Memo—You can assign the account number your vendor has assigned to you and have this number print on the memo field of the bill payment check.
- Select Default Accounts to Use—You can assign the default bank accounts QuickBooks uses when creating paychecks or payroll liability checks.
- Bank Feeds—Users can select from two data-viewing options and methods for creating renaming rules when downloading transactions.
My Preferences are unique to the username logged in to the data file. These settings are not shared globally:
Select Default Accounts to Use—Assign what bank account you want to use for the following:
- Open the Write Checks transaction
- Open the Pay Bills transaction
- Open the Pay Sales Tax transaction
- Open the Make Deposits transaction
Everyone using QuickBooks should review the settings in General Preferences. Although I have named a couple here, many are worth selecting and customizing for your company’s specific needs.
All users share Company Preferences. The following General Preferences might affect your use of accounts payable functions:
- Time Format—If you track your vendors’ time with QuickBooks timesheets, you can set a default for how portions of an hour display.
- Never Update Name Information When Saving Transactions—When this option is not selected and you change the payee name or address, QuickBooks asks whether you want to update the payee’s information. By default, this preference is not selected in a newly created QuickBooks file.
- Save Transactions Before Printing—By default, this preference is selected in a newly created QuickBooks file.
My Preferences are unique to the user currently logged in to the data file. These settings are not shared globally:
- Pressing Enter Moves Between Fields—When this setting is not selected, the Tab key advances through fields in a transaction; using the Enter key saves a completed transaction. If this option is selected, both the Tab and Enter keys advance through fields on a transaction. The keyboard combination of Ctrl+Enter saves a completed transaction.
- Automatically Open Drop-Down Lists When Typing—This time-saving feature is selected by default. It is useful if the chart of accounts has subaccounts.
- Warn When Editing a Transaction—By default, this option is selected. It helps you avoid unintentional changes to a transaction being reviewed.
- Warn When Deleting a Transaction or Unused List Item—By default, this setting is selected. It helps you avoid unintentionally deleting a transaction being reviewed.
- Automatically Recall Information—Check this option to recall both the previously assigned account and the amount, when creating a new vendor transaction.
- Default Date to Use for New Transactions—Exercise caution to ensure that you select the appropriate choice. If you are entering transactions from the past, you might want to choose the last entered date. Otherwise, I recommend setting the default to use today’s date.
When setting the Company Preferences for reminders, do not forget to also set the My Preferences for this section.
On the Reminders preference page, you set the default for QuickBooks reminders to show a summary or a list, or you opt not to be reminded of all checks to print, bills to pay, or purchase orders to print.
If you want reminders to display when you open the QuickBooks data file, select the My Preferences tab of the Reminders preference and choose Show Reminders List as an option when opening a Company file.
Reports and Graphs
The person responsible for how QuickBooks reports your accounts payable aging should review these preferences choices.
All users share Company Preferences. The Reports and Graphs preferences include the following:
- Summary Reports Basis—This feature is important because it tells QuickBooks the default basis you want to use when viewing your Balance Sheet, Profit & Loss statement, and other reports. You can always override the default when you prepare the report. Chapter 3, “Accounting 101,” has more details on the differences between accrual and cash report basis.
- Aging Reports—You can choose to age your reports from the due date or from the transaction date.
- Reports Show Items By—This setting affects how reports listing items display.
The remaining preferences affect the appearance of your reports.
My Preferences are unique to the username logged in to the data file. These settings are not shared globally:
- Prompt Me to Modify Report Options Before Opening a Report—By default, this preference is not selected. If it’s selected, each time you open a report, the Modify Report dialog box displays.
- Report and Graphs—These settings determine how a report is refreshed when the data used in the report changes. The default in a newly created QuickBooks file is Prompt Me to Refresh. I recommend selecting the refresh automatically. You can make this decision for yourself, depending on the size of your QuickBooks data file and the speed of your computer’s processor.
- Graphs Only—Specify whether to draw graphs in 2D (faster) and whether to use patterns.
Setting up your vendors for proper 1099 status is important. However, be assured that if, after reviewing this information, you determine that the original setup was incorrect, any changes made to this preference will correct prior- and future-dated reports and transactions.
The Internal Revenue Service requires a business to provide a Form 1099-MISC at the end of the tax year to any person or unincorporated business paid $600 or more for services in a given calendar year. Most incorporated businesses are not required to get a Form 1099-MISC. Contact your accountant for the most current IRS guidelines.
Select the Do You File 1099-MISC Forms? option to let QuickBooks know that you will be providing 1099 forms to your vendors at the end of the year.
The dialog box in Figure 7.2 is the first step in getting ready to track your Form 1099-MISC payments.
Figure 7.2 Choose Yes if you are required to submit 1099-MISC forms to the Internal Revenue Service.
You cannot set any My Preferences in the Tax:1099 section.
Time & Expenses
If you track time or your vendor’s supply services, or if you add time and costs to your customers’ invoices, commonly known as Time & Expense billing, you should review these preferences.
All users share Company Preferences. The Time & Expenses preferences in Figure 7.3 include the following:
Figure 7.3 Review the Time & Expenses preferences if your invoices to your customer include detailed line-item time and costs.
- Time Tracking—This preference enables the use of timesheets (for both vendor and employee time tracking) and the First Day of Work Week assignment. With this preference selected, you can include employees’ or vendors’ time details on your customer’s invoices, and you can change this status on individual time entries.
Invoicing Options—Here you can take advantage of the improved functionality of creating invoices from a list of time and expenses. Additionally, when using the Time & Expense method of billing your customers, these options offer added functionality:
Create Invoices from a List of Time and Expenses—This setting enables the use of a single dialog box displaying all unbilled time and expenses for batch invoicing to customers.
- Track Reimbursed Expenses as Income—When selected, the billable expense is treated as income when invoiced. This is the preferred method for billing in the legal profession, as well as other industries.
- Mark All Expenses as Billable—Do you provide your customers with details of your expenses? If you do, you should select this preference.
- Default Markup Percentage—Enter a percentage, and each time you add a cost to a customer’s invoice, QuickBooks adds this amount as a default markup embedded in the invoice line amount (not displayed separately).
- Default Markup Account—Select a preferred default account (usually an Income category type).
Time & Expenses has no My Preferences.