How to Setup and Use Classes in QuickBooks
1. Turn on class tracking at Edit -> Preferences -> Accounting -> Company Preferences (you may need to be signed in as the Admin to do this).
2. Add the classes you want to use at Lists -> Class List. Click on the Class button and select New. In addition to church and school, you should add a general or administrative class for any transactions that can't be assigned to either program.
3. Make sure to include a class on all your transactions. You can get a list of all the transactions that don't have a class assigned by going to Reports -> Company & Financial -> Profit & Loss Unclassified.
4. You also can get a Profit & Loss by Class report in Reports -> Company & Financial.
You do not need separate company files for each fiscal year. You just need to date your prior year transactions in the prior year. For instance, if your fiscal year is July-June and you receive a bill on 7/15/09 for the month of June, you can simply enter the bill dated 6/30/09 instead of 7/15/09 (make sure to adjust your due date). If you normally write checks without entering bills first, you'll need to change your procedures a little since I don't recommend pre-dating checks. Here is the process for Entering/Paying Bills.
1. Enter your bills at Vendors -> Enter Bills. This will increase your expenses (or assets in the case of prepaid expenses) and increase accounts payable.
2. Pay your bills at Vendors -> Pay Bills. This will decrease accounts payable and decrease cash. Do not skip to write checks because this will increase expenses and decrease cash. You'll be left with an inaccurate amount in accounts payable and your expenses will be double-counted.
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