The Company Preferences tab provides the following five general accounting check boxes as well as closing date settings. (These check boxes are probably self-explanatory to anybody who has done a bit of accounting with QuickBooks, but for new QuickBooks users, here is a brief description of what each one does.)
Use Account Numbers: The Use Account Numbers check box, if selected, enables you to enter an account number for a transaction. The associated check box, Show Lowest Subaccount Only, tells QuickBooks to display only the name and account number of a subaccount (if you’re using one) instead of the full heritage of the account.
If you use a lot of levels of subaccounts, this option can really clean up views, making it easier to tell what account you’re looking at.
Require Accounts: The Require Accounts check box, if selected, tells QuickBooks that you must specify an account for a transaction. This makes sense. If you aren’t using accounts to track the amounts that flow into and out of the business, you aren’t really doing accounting. It would never make sense to deselect the Require Accounts check box.
Use Class Tracking: The Use Class Tracking check box lets you tell QuickBooks that you want to use not only accounts to track your financial information but also classes. Classes let you split account level information in another way. This sounds complicated, but it’s really quite simple.
The account list, for example, lets you track revenue and expenses by categories of revenue and expense. You may track expenses by using categories such as wages, rent, and supplies. Classes, therefore, provide you with a way to track this information in another dimension.
For example, you can split wages expense into those wages spent for two different locations of your business. A restaurateur with two restaurants may want to do this. Note that QuickBooks also provides a box you can check to indicate QuickBooks should prompt you to assign classes.
Automatically Assign General Journal Entry Number: This check box tells QuickBooks to assign numbers to the general journal entries that you enter by using the Make Journal Entry command. You want to leave this check box selected. General journal entries, by the way, are typically entered by your CPA or your professional on-staff accountant.
Warn when posting a transaction to Retained Earnings: This check box tells QuickBooks to display a warning message whenever you or someone else attempts to directly debit or credit its retained earnings account. (Normally, you don’t want to directly debit or credit the retained earnings account. And only skilled accountants would enter transactions directly into retained earnings in any case.)
Date Warnings: The Date Warning boxes tell QuickBooks to warn you when you or someone else enters a transaction with a date too far in the past or too far into the future. If you mark either of the Date Warning boxes, you also want to specify how many days is too far into the past or too far into the future.
Closing Date settings: The Closing Date box lets you identify a date before which your QuickBooks data file can’t be changed. In other words, if you set the closing date to December 31, 2010, you’re telling QuickBooks that you don’t want any changes made to the QuickBooks data file before this date.
This means that someone can’t modify a transaction that’s dated before your closing date without getting a scary warning message. It also means that someone can’t enter a transaction by using a date before this closing date.
You can click the Set Date/Password button to display a dialog box that lets you specify a closing date and create the password required when someone wants to add an old transaction or modify an old transaction.
Long ago, past versions of QuickBooks also let you turn on and off an audit trail feature by using the Company Preferences tab of the Accounting Preferences. However, all recent versions of QuickBooks provide an always-on audit trail, so you don’t see an Audit Trail check box accounting preference any more.
An audit trail, by the way, simply keeps a list of who makes which changes to transactions. Accountants, predictably, love audit trails. Audit trails enable someone, such as your CPA, to come in after the fact and figure out why an account balance is what it is.
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Source:http://www.dummies.com/how-to/content/how-to-set-general-accounting-options-in-quickbook.html
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