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Nov 1994

Windows-based small business accounting software.

by Haas, Amy F.

    Abstract- Four Windows-based software packages are evaluated with respect to their usefulness to small business users. Two of these packages, 'Quickbooks Version 2.0 for Windows' from Intuit and 'DacEasy Instant Accounting for Windows' from DacEasy Inc., are adjudged to be particularly easy to use, in that even non-accountants should be able to make use of them. Business owners with a fairly broad knowledge of accounting, however, may find 'Profit' from Microsoft more appropriate for their needs. Business owners with large workforces, on the other hand, would be advised to use 'Peachtree Accounting for Windows' from Peachtree Software Inc. since this package offers the most comprehensive range of features among the four packages reviewed. Among others, PeachTree's program allows payroll calculation, tracking of inventory, project monitoring and report customization.

The author has reviewed four Windows-based software packages that can be used by small businesses. While all have some common characteristics, the choice depends upon user needs and sophistication.

As microcomputers have become a commonplace staple for small businesses, easy to use Windows-based, off-the-shelf accounting programs have multiplied. To determine how these programs operate and compare their features, four Windows-based accounting programs were tested using actual client data for the fourth quarter of 1993. Setup procedures outlined in each manual were followed. Transactions were entered by following each manual's instructions, on-screen help menus and on-screen prompts. Transactions were easily completed because of the intuitive nature of button bars, tool bars, and activity menus along with spontaneous guidance from on-screen prompts and context sensitive help. Technical support was called and responses were prompt and helpful. A complete monthly accounting cycle was tested. On-screen reports were viewed and printed including trial balances, financial statements, payroll, and sales tax worksheets. In addition sample W-2s, 1099s, customer statements, and vendor letters were printed. Budget and graphs were also examined. Comparative tables of major features are included as exhibits. This review was conducted using a 486 66MHz DX2 microcomputer with 8 MB RAM and a 424 MB hard drive with a 15" SVGA monitor.

Common Features

Getting Started. The programs provide on-screen tutorials that walk new users through a sample company's transactions and three of the programs provide on-screen hints that prompt users in completing tasks. Extensive on-screen help and telephone support are provided for a fee. In addition, help may be available by fax modem or in response to messages left on CompuServe, America Online, or Prodigy bulletin boards.

Data Based. All the programs provide the benefits of a database. Once entered, information may be instantly retrieved and used in many different ways without retyping. Although the programs eliminate computational and posting errors inevitable in manual systems, an error made when initially entering transactions will be pervasive.

Transaction Driven. All the programs are transaction driven. Users enter cash receipts onto on-screen deposit slips, cash disbursements onto on- screen checks, and purchase and sales transactions onto on-screen orders and invoices. Special journals, subsidiary ledgers, and the general ledger are simultaneously posted when on-screen documents are saved. The programs provide automatic GAAP compliant double-entry bookkeeping even for users with limited understanding of accounting. Other common business transactions such as credit memorandums and general journal entries are easily recorded by completing on-screen transaction forms. Users may then print these on-screen documents onto custom computer forms ordered directly from the software company or continue to prepare all or some documents manually. However, preparing manual documents would not take full advantage of the program's capabilities. A local printer or office stationery supplier can probably furnish similar forms at competitive rates. Also available are plain vanilla forms without a company letterhead for immediate use or as an inexpensive alternative to custom printed forms.

How the Process Works. Typically, the process begins by entry of account balances into a chart of accounts that can be easily customized to meet specific needs. It's not necessary to start at the beginning of an annual period. Users may begin recording current transactions immediately and go back and enter setup data and historical transactions. Entering the setup data can be time consuming and tedious, particularly if a business has a substantial active data base of inventory, customers, vendors, projects and employees. However, once initial data is entered, the user simply double clicks on items from on- screen lists to complete a transaction. For example, to record a sale to an existing customer, the user selects "sales invoice" from the menu and chooses a customer from a pull-down list. The software will automatically enter the remaining invoice information including shipping terms, credit limits, billing address, shipping address and sales tax rate from the customer database. Products or services sold may be selected from a drop-down inventory list. The program will instantly enter all necessary details such as product number, description, and selling price from the database. When saving the sales invoice, the software will automatically update perpetual inventory records, sales journal, accounts receivable subsidiary ledger, and general ledger. Accounts receivable may be instantly aged and customer statements immediately printed. In addition, some programs will automatically post finance charges and print collection letters for past due accounts.

Preparing Reports and Returns. The software makes monthly and annual accounting chores considerably easier. All programs provide uncomplicated bank reconciliations. Recurring sales or purchase transactions are easily scheduled for repetitive use. Aging of accounts payable and scheduling of payments are available at the touch of a few keys or the click of the mouse. The programs will prim out payroll tax worksheets that expedite preparation of quarterly and annual returns with one program capable of printing directly onto forms 940 and 941 and printing W-2 reports. The software's capacity to list data according to designated search criteria simplifies Filing of 1099s. Two of the programs print sales tax return worksheets that greatly facilitate the preparation of quarterly returns, particularly if the company reports to multiple states. Annual closing of accounts and printing of trial balances and financial statements are quickly accomplished by following simple on-screen steps.

Management Tools. All packages can prepare customized reports for management. Three of the packages provide job/project records for evaluating profitability. All programs produce instant unadjusted trial balances, income statements, balance sheets, cash flow statements and statements of retained earnings. Budgeting tools can be used to develop budgets, perform "what-if?" analyses and compare actual results to goals. In addition these comparisons can be expressed as colorful graphics at the touch of a button. These features are extraordinary business tools, enabling management to use both current and past data in decision making planning.

DacEasy Accounting for Windows. DacEasy Accounting for Windows version 1.0 is user friendly with an uncomplicated manual and includes a complete payroll package, tracks inventory quantities, and provides for product assembly. An intuitive button bar, grouped by frequent activities and functional areas, makes navigation very simple. It's the only program reviewed that provides a method for automating monthly accruals, deferrals, and recording either straight-line or double- declining-balance depreciation. It has some convenient features including a phone dialer for sending a fax to customers and vendors, and prints mail merge letters and mailing labels. There were some problems in viewing a few of the on-screen reports in version 1.0 that are currently being corrected. This is an ideal program for a small-business owner with a limited accounting background who needs both inventory tracking and a full payroll function.

DacEasy Instant Accounting. DacEasy Instant Accounting, at $39.99, which was not tested, is a no-frills version of DacEasy Accounting for Windows. It provides basic functions of invoicing, bill paying, banking, maintaining product lists, budgeting, and preparing instant financial reports. Convenient features include a phone dialer, a fax creator, and printing of mailing labels. It's a very easy program to get started and is designed for the small-business owner with minimum accounting knowledge who has outgrown the shoe box. A companion product DacEasy Instant Payroll at $89.99 calculates and maintains payroll records.

QuickBooks. QuickBooks Version 2.0 for Windows from Intuit, publisher of the popular personal finance program Quicken, is an extremely user- friendly program. It features a simple to understand manual, on-screen prompts called Q-cards, Quick-Fill, which enters data as you begin to type, and Auto-Fill which remembers your last transaction. Frequent activities such as ordering, invoicing, and check writing are selected from an intuitive button bar or from pull down menus. A particularly valuable feature, of QuickBooks is Quick Zoom, which allows users to examine underlying transactions by double clicking on report line items without closing the report's window. Preset reports may be easily customized by level of detail and period. There are some restrictions in the inventory area since it does not update inventory quantifies for sales and purchases. In addition, job/project tracking is limited. QuickBooks can write payroll checks and track employment data but requires QuickPay, its companion package, to calculate earnings, withholding, bonuses etc. This is an excellent program for a service business or a company that does not require extensive inventory or job project data. It is a streamlined program designed for users with limited or no accounting knowledge.

Profit. Microsoft Profit is a user-friendly program that provides on- screen prompts called Wizards and a succinct, uncomplicated manual. Users select major functions and activities from a file cabinet button bar or a toolbar. Features include full inventory tracking using weighted-average costing and detailed job/project management. It provides a payroll feature that does not calculate payroll but will track all of the payroll and withholding information required to prepare quarterly and annual tax returns.

A payroll module that calculates payroll and prints W-2s is available. The program allows for great flexibility in customizing reports by date or item. In addition, Profit graphically displays important business statistics including cash flows, inventory ratios, profitability, sales, and cost analysis. These informative and colorful graphics TABULAR DATA OMITTED TABULAR DATA OMITTED TABULAR DATA OMITTED are easily created but slow the program considerably. A limitation in program design requires posted transactions to be reversed if an error is made since they cannot be edited. Data can be directly exported to other Microsoft products such as Word, Works, or Excel in a single step or saved in ASCII tab- delimited format for exporting to other programs. Profit is a good choice for the small business owner with limited accounting background, who needs inventory and job/project tracking.

Peachtree Accounting for Windows. Peachtree Accounting for Windows version 3.0 is the most sophisticated of the programs reviewed with many convenient features and the greatest flexibility in customizing reports. Users select activities from pull down menus or by clicking navigation buttons to use various journals, ledgers or do administrative, budgeting and report printing tasks. Peachtree calculates payroll and prints W-2s, 941s, 940s, and 1099s. It provides an extensive selection of financial and management reports that are easily customized and includes a FASB No. 95, Statement of Cash Flows. However, graphics were unclear on some on-screen reports although actual printouts were crisp. Peachtree maintains thorough job/project data and offers an option for automatic reversal of accruals and deferrals. Users may design custom forms and exchange data interactively with other Windows-based programs using the dynamic data exchange (DDE) feature.

This program was the most difficult to set up, has a highly complex manual, and was the least user friendly despite on-screen prompts. Users with a strong accounting background accustomed to a full manual accounting system will like Peachtree's greater flexibility and diverse features. Users with limited accounting knowledge may find it difficult to master.

The Choice is Yours

Small business owners with even a minimum accounting background will find all the programs easy to use, particularly QuickBooks and DacEasy Instant Accounting. Users with greater accounting knowledge or in need of job/project and inventory tracking might opt for Profit or DacEasy Accounting for Windows. Larger business owners with more complex needs may select Peachtree Accounting for Windows, which offers payroll calculation, full inventory tracking, job/project tracking, and greater flexibility in customizing reports.

Amy F. Haas, MBA, CPA, is assistant professor of business at Kingsborough Community College of CUNY.

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