Getting started with
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We've compiled a list of key terms that can assist you with managing your finances.



Accounts Payable (A/P) Aging Summary

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A report that provides a snapshot of all of your unpaid bills. It shows how much you owe, who you owe it to, and how much is overdue. The report is grouped by time period or “age” such as 1-30 days, 31-60, etc. so you can quickly see the time period any bill has been outstanding.

Accounts Receivable

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Accounts Receivable (A/R) is the money that is owed to you by your customers for products and services you have provided. This includes sales that you've made, but that customers have not yet paid.

Accounts Receivable (A/R) Aging Summary

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A report that shows which customers owe you money, including any unpaid invoices and unused credit memos. This report is grouped by time period or “age” such as 1-30 days, 31-60, etc. Your collections department can use this report to identify which customers are overdue and how long they have been overdue.

Accumulated Depreciation

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The total amount of depreciation expense recorded for an asset since you acquired the asset and put it into use. To track accumulated depreciation, you will set up a specific account in your chart of accounts and periodically record a depreciation expense against the asset. See Depreciation.

Actuals

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Actuals, as opposed to budgets and estimates, reflect reality. This is real revenue an account has generated or real money an account has paid out in expenses at any point in time. With QuickBooks, you can run reports to compare actual amounts paid or generated, actual hours completed (jobs) to estimated costs, sales and hours.

Bill Payment

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A payment you've made to a vendor.

Chart of Accounts

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The Chart of Accounts (COA) is the backbone of your accounting system. You can think of it as a file cabinet where each file stores a certain type of information you want to track. It lists each account you'll use to track how much money is coming in, how much money is going out and ultimately, how much money you have. The COA provides a structure for your business that will be particularly helpful for your accountant in keeping your books organized.

Cost of Goods Sold (COGS)

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The Cost of Goods Sold account is added to your chart of accounts the first time you add an inventory item. QuickBooks uses this account to track how much you paid for goods and materials that were held in inventory and then sold.

Credit Card Credit

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When a downloaded transaction (using Online Banking) doesn't match an existing credit in your register, you need to create a Credit Card Credit. A Credit Card Credit decreases any balance owed and increases the amount of credit available to you.

Credit Memo

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A Credit Memo is used to record a return when a customer returns items for which you've already entered an invoice, a payment or sales receipt. Completing a Credit Memo before issuing a refund is important to ensure the sale, return and refund are all accurately tracked.

Credit Note

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A Credit Note is an actual form or letter you receive from a vendor to notify you that your account has been credited. This may happen for a variety of reasons including an error in an invoice amount, an incorrectly applied discount, etc.

Debtor

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Any person or organization that owes you money. Debtors are legally obligated to pay you for the goods or services you've provided. Likewise, if you owe another person or business money, you or your organization would also be considered a debtor.

Delayed Charge

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A Delayed Charge is a reminder to bill a customer for an activity or fee that you're not quite ready to invoice yet. It's an easy way to capture details for a product or service you need to remember to bill for in the future.

Delayed Credit

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A Delayed Credit reminds you to give a customer a credit the next time you bill them. You simply enter a delayed credit and the next time you bill the customer, you can add the delayed credit to reduce the customer's bill by that credit amount.

Depreciation

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Depreciation shows how quickly you’re using up an asset. There are many different methods for calculating depreciation and QuickBooks has tools to help figure out this expense for you. Additionally, your accountant can help determine which method makes sense for your business.

Depreciation Expense

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A Depreciation Expense is the amount or portion of an asset you identify as being "consumed" or "used up." The part that has been used up is listed as an expense.

Equity

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Equity is the net worth of your company. This represents the difference between what you owe (liabilities) and what you have (assets). Equity comes from two sources: money invested in your company and profits or losses from your business.

Exclusive of Tax

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Exclusive of Tax means that tax is added to the price of an item. In QuickBooks, tax settings determine whether an item will add tax on top (exclusive of tax) or be included (inclusive of tax) in the price of an item.

Expenses

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Expenses are the money you spend or costs you incur in the process of doing business. They can include an exchange of cash or other assets in return for goods or services. Expenses can also reflect the portion of an asset that is "used up". See Depreciation Expense.

Gross Profit

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Your company's Gross Profit is the amount of revenue generated before you subtract the expenses associated with making and selling your products and services. Gross Profit = Net Sales - Cost of Goods Sold (COGS).
See Cost of Goods Sold.

GST/HST Exception Report

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Almost everyone has to pay GST/HST tax on purchases of property and services. Few sales or supplies are exempt from GST/HST. This report helps you quickly identify any goods or services for which GST/HST was not collected.

Inclusive of Tax

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Inclusive of Tax means that the item amount listed includes the tax for the item. In QuickBooks, tax settings determine whether an item amount includes the tax amount (inclusive of tax) or added on top (exclusive of tax) in the price of an item.

Journal Entry

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In the today's computerized accounting world, sometimes it is necessary to make manual adjustments to accounts. Manual adjustments are called journal entries. In QuickBooks, journal entries are made in the "Make General Journal Entry" window.

Net 30

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A Net 30 payment term tells your customer that you expect the total amount on their invoice to be paid in full within 30 days after they've received your goods or your service has been completed. This provides your customer time to get money into their account and pay you.

Net Income

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Net Income is the revenue your business has generated after you subtract the costs of goods sold, expenses and taxes.

 
Net Pay

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Net Pay is the amount an employee "takes home" after deductions (similar to a company's net income). It includes the employee's gross wages minus any withholdings such as payroll taxes or other items like insurance and dues.

Open Balance Report

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A report that shows you at a glance either how much a specific customer owes you or how much your company owes a specific vendor. The open balance amount column shows the amount due for each bill.

Opening Balance Equity

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An account that is automatically created in your company's chart of accounts by QuickBooks when you set up a company for the first time. It allows you to easily add a beginning balance to an asset, liability or equity account in your balance sheet and have QuickBooks take care of the bookkeeping entry that needs to be made.
See Equity.

Out of Scope Tax

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An Out of Scope Tax is used for non-taxable good and services. It means that a transaction or an item on a transaction will be left out of GST calculations.

Out-of-Cycle Paycheques

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Paycheques that are used to pay employees for anything outside of a regularly scheduled payroll. For example, you may issue Out-of-Cycle Paycheques for special circumstances like bonuses or late overtime or other items that did not make the regularly scheduled pay run.

Overdue

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Any obligation that is unpaid past its due date including loans or bills.

Pay Schedules

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Pay Schedules are payroll runs that are set up to happen with regular frequency. Using a Pay Schedule makes payroll processing more efficient because QuickBooks determines the processing dates for you automatically.

Payee

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A person or organization that you're paying or will be paying money.

Payroll

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Payroll is many things. It can be:

  1. A list of your company's employees and the amount they're paid
  2. The total amount of wages and salaries paid to your employees or
  3. A QuickBooks module that supports you in paying your employees, calculating and paying taxes and completing year-end procedures.
Payroll Liabilities

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Like other liabilities, payroll liabilities are amounts you owe but have not yet paid. Payroll Liabilities include payroll tax amounts that you've withheld from employees as well as amounts your company owes as a result of its payrolls.

Profit and Loss

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The Profit and Loss statement (also referred to as the P&L, income statement, statement of income and many other similar names), is a core financial statement that lists your company's revenues, expenses and most of the gains and losses for the specific time period for which you're reporting.

Purchase Order

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A document generated by a buyer (which could be you or your customer) that authorizes a purchase and includes details such as what is being purchased, the price and other details like shipping information and payment terms. A Purchase Order is a legally binding contract.

Reconcile

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Reconcile means to match up two sets of records to identify any differences. As you write checks, withdraw money, make deposits and incur charges, each of the transactions should be recorded and then matched with your bank's records. Reconciling is a key step to ensure your accounting records are accurate.

Record of Employment

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A Record of Employment (ROE) is a summary form that details an ex-employee's work history with your company. You must complete an ROE when an employee quits, is laid off or meets other special circumstances as identified by Service Canada. Fortunately, QuickBooks is very helpful for preparing ROE forms.

Recurring Transactions

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Recurring Transactions are helpful when you have bills that occur on a regular basis. For example, you may pay a utility bill each month. You can set up QuickBooks to automatically create the transaction for you to save time and ensure regular payments aren't forgotten.

Sales Receipt

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A Sales Receipt shows that full payment was received at the time of a sale. Sales Receipts can included payments by cash, check or credit card. Using Sales Receipts is important if you track customers and jobs because QuickBooks updates accounts automatically ensuring your records accurately reflect the sale.

Single Time Activity

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A Single Activity entry reflects time spent by one person doing a single activity for a single job on a single date such as an attorney recording time spent on a client phone call. When you enter a Single Activity, QuickBooks automatically records it on that person's weekly timesheet.

Special Accounting Transactions

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These are those "once-in-a-while" transactions that are problematic because you don't do them often enough to remember how to do them. This could include transactions like recording bad debt, trading receivables with payables and capturing customer down payments.

Statement

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A billing statement (or simply "Statement") lists the charges that a customer has accumulated over a specific period of time. Providing customers with a billing statement is helpful when you bill periodically or want to share past due information from previous billing periods.

Supplier Credit

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Supplier Credit is a credit you receive from vendor because you overpaid a previous bill, returned items or a variety of other reasons. In QuickBooks, you can enter the Supplier Credit information and apply it to reduce future payments to that supplier.

T4

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The Canadian T4 tax slip (or Statement of Remuneration Paid) is a key document that employees need to prepare their taxes. It includes the employee's wages and taxes withheld during the calendar year. You must also submit a T4 to the Canadian Revenue Agency for each employee.

Taxable Sales

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The amount of sales you actually owe taxes on. Within QuickBooks this is calculated as your net sales minus all business expenses.

Unbilled Activity

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Activity you plan to bill to a customer, but have not yet included on a saved invoice. Unbilled Activity includes delayed charges and time charges.

Un-Deposited Funds

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The Un-Deposited Funds account is a holding account. It's like keeping money in a cash bag until you're ready to deposit the money with your bank. Similarly, you can choose to have customer payments sit in this account temporarily until you're ready to move them to a specific QuickBooks account.

User Control

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With QuickBooks you can ensure each user has access only to the information they need. This feature is helpful if you have more than a couple of employees’ who use QuickBooks as it helps reduce the risk of fraud and error. You can also add your accountant as a regular user to give them access to your books.

Did you know accounting professionals can be a great asset in providing support and management of your books.