Knowing QuickBooks Is Not the Same as Knowing Accounting
QuickBooks will take a truck coded to office supplies without complaint. Knowing where the buttons are isn't the same as knowing what the transaction is.
“We know QuickBooks” answers a different question than the one that matters. Knowing QuickBooks means knowing where the buttons are. Knowing accounting means knowing what a transaction is, where it belongs, and what it has to reconcile to. The software handles the first part and has nothing to say about the second.
Five things QuickBooks will take without complaint
- A truck coded to office supplies. The asset never reaches the balance sheet, and the business shows a loss the month it bought the truck.
- A loan payment posted entirely to expense. The loan balance never goes down, and profit is understated by every principal payment.
- An owner’s draw recorded as payroll. Payroll won’t match the filings, and equity is overstated.
- A customer deposit booked as revenue. It’s a liability until the work is done. Booked as income, one month looks great and the next few look weak.
- A bank rule that codes every payment to a vendor the same way. Fine until that vendor sells you equipment or does a repair.
Every one of those gets entered successfully. Every one is accounted for wrong, and most of them change the tax return.
Five questions for your bookkeeper
- Can you explain every balance on the balance sheet?
- What is each account reconciled to? For the loan, the answer should be the lender’s schedule.
- How do you record the loan payment? You want to hear “split.”
- What happens with a customer deposit? If it’s income the day it arrives, the books follow the bank, not the business.
- When was last month closed? A real close has a date after which the numbers stop changing.
Plenty of bookkeepers know the accounting cold. Knowing the software just doesn’t tell you whether someone does, and these questions will.
Where that leaves the software
This isn’t an argument against QuickBooks. It’s an argument for setting it up around the accounting: a chart of accounts that fits, bank rules only where transactions really are identical, supported opening balances, and recurring entries so the right treatment happens by default. That’s the systems and setup work I do. When the history can’t be trusted, it’s reconstruction first.