Sage 50 Accounting Basics

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Sage 50 Accounting Basics
Slideshow 1A
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Contents

• Two types of accounting software 3
• Modular System 3
• Integrated System 5
• Sage 50 Accounting Basics 9
• Session Date 10
• The Sage 50 Accounting HOME Window 12
• Classic View 12
• Enhanced View 13
• Dashboard 15
• The LOOKUP Button 16
• Using HELP 17
• Drilldown 18
• Graphs 19
• GAAP 20-29

Slideshow 1A
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There are two types of computerized accounting
systems modular and integrated. Modular
System In the modular system, each component of
the accounting software works independent of the
General Ledger and of each other. This is
commonly used in large companies, especially when
company operations are conducted in separate
departments. Study the illustration at
right. Click to continue.
Accounts Receivable
Accounts Payable
General Ledger
Payroll
Inventory
Order Entry
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Modular System (continued) At the end of an
accounting period, or whenever financial
statements are required, the data from the
various modules are consolidated with the General
Ledger. Click.  It is only when the data from
the subledgers have been consolidated with the
General Ledger that accurate financial statements
may be produced. Examples of this type of system
are ACCPAC ERP series, Great Plains, Solomon,
etc. Click to continue. 
Accounts Receivable
Accounts Payable
General Ledger
Payroll
Inventory
Order Entry
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Integrated System An integrated accounting system
works very differently. Although there are
different modules, they are connected as one
united system, with the GENERAL LEDGER as the
hub. Sage 50 Accounting is a good example of an
integrated system Study the basic structure of
Sage 50 Accounting at the right. Click to
continue.
Accounts Payable
Accounts Receivable
General Ledger
Projects
Inventory Services
Payroll
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Integrated System (continued) When a transaction
is entered in one module, all other related
modules are updated. For example, if you enter a
sale of merchandise on credit in the Sales
Journal of the RECEIVABLES module, Click. the
ACCOUNTS RECEIVABLE account in the General Ledger
is increased, Click. and the corresponding
clients record is updated. Click to
continue.
Receivables
Payables
Client Sub-Ledgers
Vendor Sub-Ledgers
General Ledger
Projects
Inventory Services
Payroll
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Integrated System (continued) Similarly, when
the company pays for a purchase on credit, you
would enter the payment in the Payments Journal
of the PAYABLES module. Click. The vendors
record is updated, Click. and the CASH and
ACCOUNTS PAYABLE accounts in the GENERAL LEDGER
are updated accordingly. Click to
continue.
Receivables
Payables
Client Sub-Ledgers
Vendor Sub-Ledgers
General Ledger
Projects
Inventory Services
Employees Payroll
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Integrated System (continued) As in the modular
system, financial statements are printed from the
General Ledger module. The integrated type of
accounting software is commonly used in
small-to-medium-size companies, especially when
all accounting functions are done in one office.
Examples of this type of accounting software are
Sage 50 Accounting and QuickBooks. Click to
continue.
Receivables
Client Sub-Ledgers
Vendor Sub-Ledgers
Payables
General Ledger
Projects
Inventory Services
Employees Payroll
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• Sage 50 Accounting Basics
• The standard modules in Sage 50 Accounting
  include
• COMPANY (contains G/L)
• Customers Sales (Receivables)
• Vendors Purchases (Payables)
• Employees Payroll
• Inventory Services
• Projects
• Banking
• You can change the name of any module, if
  desired. Study the relationship of the various
  modules to the COMPANY module and to one another.
  
• Click.
• Another module, Time Billing, is also available
  to record details of hours spent on clients in
  order to determine billable hours for invoicing.
  Time Billing is in Appendix S.
• The features illustrated in the slides that
  follow apply to all modules. Other special
  features will be shown in relevant chapters where
  they can be used to best advantage.
• Click to continue.

Payables
Receivables
COMPANY
Projects
Inventory Services
Employees Payroll
Banking
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Sage 50 Accounting Basics Session Date Session
date is the current working date. Never click the
box for Do not show this message again if you
wish to keep track of the session date. When you
click the CALENDAR beside the Session Date
box... Click calendar now (see red arrow) you
can select one of the dates by clicking on
it. Click 30 on the April calendar. A warning
appears. Click OK. The new session date will
display. You may change it if desired. Click OK
now. Notice that the current session date
automatically becomes the default transaction
date for all transactions until you change the
session date. However, you may change the
transaction date when necessary. You will learn
more about session dates in the next
slideshow. Click to continue.
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Session Date (continued) Changing the Session
Date while in Sage 50 Accounting The Session
date box automatically comes on as soon as you
open a company file in Sage 50 Accounting. You
may accept the current session date or change it
to a new date by clicking the calendar beside the
current session date at the upper right corner of
the Home window (see red arrow). Click to
continue.
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The Sage 50 Accounting HOME Window Classic
View There are two options available to view the
HOME page The CLASSIC or ENHANCED View. Study
the Sage 50 Accounting Home window in CLASSIC
view below. Notice that all the modules are
displayed. As in any other Windows applications,
the Sage 50 Accounting window has a title bar, a
main menu bar, and a toolbar with icons on top of
the screen. The module titles are shaded,
followed by the corresponding ledgers. The
various journals provide windows where you would
input transactions. The history (quill) symbol
indicates that the module is ready to accept
historical transactions, but not new
transactions. Click to continue.
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The Sage 50 Accounting COMPANY Module Window
Enhanced View In the ENHANCED View, only one
module is displayed at any one time. This is the
ENHANCED View of the COMPANY module which
includes the Chart of Accounts and the GENERAL
JOURNAL (see red arrows). You may change the name
of any of the modules to suit your companys
setup. Study the COMPANY window now. Click.
You can find detailed information about the Home
Window in a 7-minute tutorial at the LEARNING
CENTRE. Study what tutorials you can find in the
Learning Centre. Click to continue.
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The Sage 50 Modules Click each of the modules
below from top to bottom and read the
corresponding explanation at the right.
Click to
continue.
The RECEIVABLES module contains the customer
files and keeps track of sales and payment
transactions with customers.
The PAYABLES module contains the vendor
(supplier) files keeps track of money owed and
paid by the company to vendors
The INVENTORY SERVICES module contains the
Inventory files and keeps track of Inventory
quantities and costs.
The EMPLOYEES PAYROLL Module is used to keep
track of employee records, income and deductions.
Sage 50 Accounting automatically keeps track of
taxes and remittances due to specified payroll
authorities.
The PROJECTS module allows you to allocate
assets, purchases, revenue and expenses for
particular business activities to or to
projects, division, department or job sites.
The BANKING module is where BANK (or CASH)
transactions are tracked. It also allows you to
perform Bank Reconciliation with the company
records (referred to as ACCOUNT RECONCILIATION).
It is in the COMPANY module that you would create
company files including the Chart of Accounts.
General Journal transactions are entered in the
Company module.
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Dashboard The Dashboard offers you a visual
snapshot of your company's performance and
activities that enable you to make informed
decisions in a timely manner. The Dashboard
button (see below) is above the module listing on
the Home page. Click each circled number below
and study the explanation of each part of the
Dashboard.
Account Balances. Active accounts and their
balances. You can display how much cash your
business has, what is owed to your business, and
what your business owes.
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Aged Purchase Invoices. Displays amounts owed to
your vendors based on the aging periods that
you've set up in Sage 50 Accounting.
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Revenue Year to Date. Shows your company's net
income and how it is derived from your revenues
and expenses. Use this widget to determine how
well your business is doing year-to-date.
Items on Order. Displays the number of items
currently recorded on sales orders or
back-ordered in sales invoices, and the number of
items currently recorded on purchase orders or
back-ordered in purchase invoices. Use this
widget to quickly see how many items you have on
sales orders, and decide if you have enough
inventory to fill your orders or whether you
should order more.
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Aged Sales Invoices. Displays the invoice amounts
owed to your company based on the aging periods
that you've set up in Sage 50 Accounting.
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Revenue versus Payroll Expenses. Provides a
side-by-side comparison of your company's revenue
and your payroll expenses. Used to determine if
your company's month-to-month payroll costs are
reasonable relative to revenues earned.
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The LOOKUP Button Whenever you see the LOOKUP
button beside a field, you can click it Click
the LOOKUP button beside the INVOICE field (see
arrow) a Search box will appear that will
allow you to specify what you are looking for. In
this example, because the field where the LOOK UP
button is for INVOICE, the LOOKUP window for
Purchase Invoices (see where arrow is pointing)
will appear. Click to continue.
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Using HELP HELP in Sage 50 Accounting works very
much like Help in other Windows applications.
Click the circled numbers on the Home window and
study the various ways you can get HELP.
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Drilldown In Sage 50 Accounting, you can go
deeper into an entry in many of the reports or
parts of financial statements to see more detail.
Click. Move your pointer around the report
(without clicking). Any time the mouse pointer
changes to a magnifying glass with a plus sign in
it (see red arrow), you can see more details
about the specific entry. For example, if you
wish to view the details of the HST Charged on
Sales of Santos Luggage as shown on the
statement, you would place your mouse over the
entry (see the magnifying glass) and double-click
on it. Click. The corresponding document will
then display. This feature is available in any
report. Click to continue.
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GRAPHS A picture is worth a thousand words. If
you wish to display data in graphic format, Sage
50 Accounting provides some graphing
capabilities. Study the list that displays by
clicking GRAPHS on the Main Menu (see
right). Click Sales vs. Sales Due now. you can
then enter the specifics for the report. Click
SELECT ALL to view the resulting graph. This is a
column bar chart. Sage 50 Accounting provides
various types of graphs. HELP gives you a
description of all graphs available in Sage 50
Accounting. Click to continue.
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Generally Accepted Accounting Principles
(GAAP) How would you know how to interpret and
record a business transaction? Processing
transactions in Sage 50 Accounting is no
different from what you have already learned in
your Accounting course using Generally Accepted
Accounting Principles (GAAP). Click and study the
definition. GAAP not only guides you in
determining how to treat transactions and
communicate financial information but it can also
help interpret financial statements between
companies. Click to continue.
GAAP A set of policies, procedures and guidelines
that direct accounting practitioners to record
and report financial information.
GAAP is published in a handbook by the Canadian
Institute of Chartered Accountants (CICA).
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GAAP (Review) Representational
Faithfulness Click and study the Represenational
Faithfulness principle, then read the example
below. Example A company should use and file
relevant source documents (invoices, cheques,
memos, etc.) that can be verified and are free of
any personal bias and judgment. These source
documents should be part of the audit trail.
Click to continue.
Representational Faithfulness
Accounting information must be complete, neutral
(truthful, factual, unbiased), and it must be
reliable (without material errors/supported by
objective evidence).
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GAAP Historical Cost Principle You will apply
GAAP when you complete the exercises in the
various modules. The slides that follow discuss
the principles that apply to ALL types of
transactions. First is the Historical Cost
Principle. Click and study the principle, then
read the example below. Example A computer
bought for 3,000 is recorded as an asset at the
time of purchase. If the value of that same
computer decreased in price to 2,500 shortly
after purchasing it, the value in the accounting
records remains the same. Any change in the
market value of the asset does not get reflected
in the accounting records. This principle is
followed even when the value of the asset
increases. Click to continue.
Historical Cost Principle
Items are recorded at their acquisition cost
transacted with an outside party.
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GAAP (Review) Full Disclosure Principle Next is
the Full Disclosure Principle. Click. Example A
firm may report an unusually high amount of a
particular expense on the Income Statement. To
avoid confusion or misunderstanding, the entry
should include a note explaining the high
expenditure item, thus following the Full
Disclosure Principle. Click to continue.
Full Disclosure Principle
Full disclosure requires that all relevant
information pertaining to the firm that may be
important to the users of the information must be
revealed on the financial statements.
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GAAP (Review) Business Entity Concept Click and
study the concept of Business Entity, then read
the example below. Example The companys
financial records should not include information
about the owners personal belongings, such as a
house or a personal car. The owner should also
have his or her own bank account separate from
the companys bank account. If the owner wants to
invest more money into the business, a cheque or
money transfer should be made to the company and
recorded in the company books as additional
investment. If the owner takes any item that
belongs to the business(e.g., computer equipment)
for personal use, it should be recorded as a
withdrawal. Click to continue.
Business Entity Concept
A companys financial information is recorded and
reported separately from the owners personal
financial information.
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GAAP (Review) Time Period Concept Click and
study the principle. According to this
principle, an organizations activities are
identified with specific time periods e.g., a
month, three-month quarters, or a year. Most
companies prepare monthly (month-end) reports and
use one year (year-end) as their primary
accounting period. The annual reporting period
(referred to as fiscal year) is not always the
same as the calendar year ending December 31. A
fiscal year can consist of any 12 consecutive
months. Click to continue.
Time Period Concept
The economic life of a business can be divided
into time periods.
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GAAP (Review) Comparability (Consistency)
Principle Click and study the principle, then
read the example below. Example Owners and
managers use information reported on financial
statements when making decisions. Information
from one year is often compared to previous
years. If accounting information is recorded and
reported differently from one year to the next,
the information cannot be compared. Click to
continue.
Comparability (Consistency) Principle
In the preparation of financial statements, the
same accounting concepts are applied in the same
way in each accounting period.
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GAAP (Review) Matching Principle Click and study
the principle and example below. Example An
accounting consultant, Faye Anderson, bought
600.00 worth of paper and printing supplies in
December. In the same month, she collected
2,800.00 consulting fees from her clients. Faye
entered 600.00 for paper and printing supplies
as prepaid asset at the time of purchase. At the
end of the month, she calculated that she used up
285.00 worth of the supplies she purchased
earlier. When Faye prepares her monthly financial
statement for December, she should report the
2,800.00 revenue and her expenses to earn the
revenue, including 285.00 (not 600.00) for
supplies. Click to continue.
Matching Principle
Expenses are matched with revenues in the period
when efforts are made to generate the revenue.
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GAAP (Review) Revenue Recognition and
Realization Principle Click and review the
principle and read the example
below. Example Some businesses sell goods or
services for cash only other businesses sell
goods or services on one date and receive payment
from customers on a later date. If a customer
buys merchandise on June 1 and pays on July 15,
the seller records the sale on June 1, not on
July 15 when payment is received. Click to
continue.  
Revenue Recognition and Realization Principle
Revenue from business transactions is recorded at
the time goods or services are sold for cash or
on credit.
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Sage 50 Accounting Basics Other Common
Features Other Sage 50 Accounting features will
be illustrated as you do the exercises in the
various modules. Go back to your text and
proceed from where you have left off. If you wish
to get more information about the Home window,
open a Sage 50 Accounting company file, click
Learning Centre at the left panel and view the
7-minute tutorial THE HOME WINDOW. Press ESC now
and click the EXIT button.