1 INTRODUCTION CPA-LEDGER is an automated general ledger system written for IBM PC and IBM PC compatible microcomputers. It is written in IBM's Advanced BASIC (BASICA) computer language and can be used on PCs with one or two floppy disk drives or with fixed disk. CPA-LEDGER is designed for microcomputers with one disk drive. If your microcomputer has two drives, read Appendix A. Appendix B contains information for fixed disk. In this manual, we will refer to four diskettes by name. They are "PC-DOS diskette", "program diskette", "practice diskette", and "data diskette". Remember those names. PC-DOS DISKETTE. The "PC-DOS diskette" came with your microcomputer. It contains the IBM Personal Computer Disk Operating System and the BASICA computer language. As will be explained later, you will need it for CPA-LEDGER. PROGRAM DISKETTE AND PRACTICE DISKETTE. You received the "program diskette" and the "practice diskette" when you ordered CPA-LEDGER. Use the program and practice diskettes to become familiar with CPA-LEDGER. . The "program diskette" contains the CPA-LEDGER computer program. . The "practice diskette" contains a practice general ledger with balances that have already been set up for you. This diskette and the "program diskette" may be used to practice the CPA-LEDGER routines. DATA DISKETTE. The "data diskette" will be used to capture all accounting data relating to transactions processed by your business. The "program diskette" and the "data diskette" must be used together for setting up the general ledger files and for processing all transactions to be recorded on the "data diskette". Use one of your own diskettes for the "data diskette". 2 DRIVE A, DRIVE B, AND DISKCOPY We assume that you understand how to use your PC-DOS diskette to start your system and that you understand the meaning of the terms "Drive A" and "Drive B". We also assume that you know how to use the DISKCOPY command to make copies of your data and program diskettes. If you do not, read Chapter 1 of your IBM Personal Computer Disk Operating System manual. The DISKCOPY command is covered in Chapter 2 of the same manual. USING CPA-LEDGER. To use CPA-LEDGER, you will need four things. They are (1) a microcomputer (2) a printer, (3) a PC-DOS diskette, which includes PC-DOS and BASICA, and (4) a knowledge of double-entry bookkeeping. We will discuss each of these areas. First, let's talk about equipment needs. EQUIPMENT NEEDS. The minimum equipment configuration is: . An IBM PC or PC compatible microcomputer with one floppy disk drive. . An 80 or 120 column printer. . One double-sided, double-density floppy diskette to hold CPA-LEDGER. (This is the "program diskette".) . One double-sided, double-density floppy diskette to hold the data files that will be created through your use of CPA-LEDGER. (This is the "data diskette".) Appendix C contains technical information about how to prepare your data diskette and about storage capacities of CPA-LEDGER. Read the appendix carefully before you use your data diskette. Don't take the chance of running out of disk space! While you are practicing CPA-LEDGER, you will also need a blank floppy diskette (for use while reading chapters 3 through 5) and the "practice diskette" while reading the remaining chapters. 3 PC-DOS DISKETTE and BASICA. Make sure that you have a PC-DOS diskette (IBM's Personal Computer Disk Operating System, Version 2.1 or higher) and BASICA (Version 1.1 or higher) before you use your program diskette. Look in the prefaces to your Disk Operating System and BASICA reference manuals. Version information is shown there. YOUR KNOWLEDGE OF DOUBLE-ENTRY BOOKKEEPING. You should have a knowledge of double-entry bookkeeping before you use CPA-LEDGER. Let's define, specifically, what you need to know. You should understand how to: . Prepare the beginning or "opening" entries for starting your general ledger. (Once you prepare the opening entries, CPA-LEDGER asks you to enter them in the system.) . Review each financial transaction that occurs in your business and determine the proper accounting entry. (Once you decide on the accounting entry, CPA-LEDGER asks you to post it to the general ledger.) . Prepare a standard bank reconciliation. (The version of CPA-LEDGER that you have will not automatically reconcile your bank account(s), but it will separately list all of your bank transactions so that you may make the reconciliation.) . Prepare the proper adjusting journal entries each time before you prepare an Income Statement and a Balance Sheet. (You decide which accounts need to be adjusted. Then, the system prompts you to enter the adjustments.) Appendix D contains some comments about accounting and bookkeeping systems. Read the Appendix. It contains some observations that may be helpful to you. Once you apply your bookkeeping knowledge and enter data into the system, CPA-LEDGER takes over. It automatically provides you with any number of useful products. AUTOMATIC FEATURES. CPA-LEDGER has many automatic features - all you do is select and execute any one of the options that appear in menu form on the computer's screen. Then you sit back and simply watch the printer lay out the information that you asked for in an easy to read format. 4 Here are just a few of CPA-LEDGER's automatic capabilities. It will: . List your chart of general ledger accounts, anytime that you wish. . Add new general ledger accounts, anytime that you wish. . Monitor your input into the system and report, in easy to understand English, errors that you make. . Find and print any entry that you have entered into the general ledger. . Show you the status of any account, at any time. . Reconstruct any account, for any period that you wish. . Prepare a check register, on demand, to provide information for reconciling bank accounts or for researching your bank transactions. . Summarize each general ledger account and report the results to you. . Prepare a trial balance, on demand, so that you may review the status of the accounts. . Prepare and analyze your financial statements, anytime that you wish. HOW THIS MANUAL IS ORGANIZED. This manual is subdivided into progressive chapters. Chapter 1 introduces you to CPA-LEDGER and gives you an overview of the system. Beginning with Chapter 3, each CPA-LEDGER option is taken up, in turn. You will be walked through the entire system - from starting your electronic books to preparing financial statements. Appendix D discusses some of the planning that you should complete before you start your bookkeeping system. Appendix E suggests forms and procedures for providing complete supporting documentation of everything that you enter into CPA-LEDGER and for providing an orderly and systematic method for recording information in your electronic books. Read Appendix D and Appendix E very carefully. Even though they are not a complete course in accounting procedure, you should find enough there to provide a starting point for planning your accounting system. Do not make the mistake of glossing over the planning process. Plan, 5 precisley,the accounts that you will need, when your entries will be recorded, who will record them, what supporting documentation will be required, and when financial statements will be prepared. Decide on all forms that you will need and train your employees in how to use them. These are only a few considerations. Appendix D and Appendix E go into more detail. If you do not feel comfortable in planning your accounting system, consult with your local CPA. He or she can assist you. 6 CHAPTER 1 CPA-LEDGER OVERVIEW MENUS - THE WAY YOU ACCESS CPA-LEDGER's DATA PROCESSING OPTIONS. CPA-LEDGER uses "menus" to list each of the data processing options at your disposal. Selecting the options is as easy as ordering food at your favorite restaurant. The waiter seats you and hands you a menu. You open the menu and note that each entre is numbered consecutively. To the right of each number is the name of an entre. When the waiter asks you for your order, you might reply that you want number one for roast beef, or number two for New York Strip Steak, or possibly number six for lobster. CPA-LEDGER follows a similar procedure - with the same numbering scheme. 1, 2, 3 ... one under the other. To the right of each number are a few words describing a data processing option that is assigned that particular number. You select an option by entering a number at your keyboard. HOW TO BEGIN USING CPA-LEDGER. As already mentioned, CPA-LEDGER is written in IBM's Advanced BASIC programming language. So, to use the system you will need access to BASICA. The following steps will do that for you. . Place your PC-DOS diskette in Drive A. . After the "A" prompt appears (meaning that the default drive is Drive A) type this command at your keyboard, immediately to the right of the "A" prompt: BASICA In a few seconds, BASICA will be loaded into internal memory and be ready for you to use. As soon as BASICA is loaded, remove the PC-DOS diskette and insert your program diskette in Drive "A". CPA-LEDGER is now ready to run. CPA-LEDGER is activated by typing either of two commands, described in the next two sub-sections, to display the menu named "SETUP" or the menu named "DAILY". 7 AN OVERVIEW OF THE "SETUP" MENU. At the beginning of each accounting year, use the SETUP menu to establish a new general ledger for recording the coming year's transactions. To use SETUP, type the following command, as you see it below, at your keyboard. RUN "SETUP" In a few seconds, the SETUP menu will be displayed on your computer screen. The menu will look like this: CPA-LEDGER SETUP MENU SELECT ONE OF THE OPTION NUMBERS BELOW. 1. MAKE A NEW GENERAL LEDGER AND ASSIGN ACCOUNT TITLES. 2. IDENTIFY SELECTED ACCOUNT NUMBERS THAT ARE IN THE NEW GENERAL LEDGER AND IDENTIFY YOUR BUSINESS NAME. 3. ASSIGN BEGINNING DOLLAR AMOUNTS TO NEW GENERAL LEDGER ACCOUNTS. 4. STOP ALL CPA-LEDGER PROCESSING AND RETURN CONTROL TO PC-DOS. WHICH OPTION NUMBER DO YOU SELECT? _ You MUST use Options 1, 2, and 3 in consecutive order. After you use Option 1, CPA-LEDGER prints a complete list of general ledger accounts, with account numbers. These numbers are the input for Options 2 and 3. It is not necessary to use Options 1, 2, and 3 during one continuous session. You may use Option 1 today, Option 2 tomorrow, and Option 3 the following day. SETUP OPTION 1. This option asks for the (1) number of, and (2) titles of new accounts to be included in the general ledger. Give the number of accounts that you need, but do not include extras. CPA-LEDGER will request account titles for the number of accounts that you indicate. For example, if you indicate that you want five accounts under the Balance Sheet classification Current Assets, CPA-LEDGER will request five account titles. (Don't worry, CPA-LEDGER automatically adds extra accounts for future expansion.) 8 Be very careful while entering account titles and other information. Your input is displayed for your final review and approval before it is added to the general ledger. However, once your input is added to the general ledger, you cannot use CPA-LEDGER for correcting mistakes - such as a misspelled account title. (If we gave you that capability, someone else could make changes that you might not want made. Think about it!) After you have given all of your input, Option 1 prints a complete list of all general ledger accounts. Review the list very carefully and note any input errors. As mentioned above, you cannot use CPA-LEDGER to correct any mistakes. But, you can correct them with the following procedure: . Return to PC-DOS by typing the word "SYSTEM" at your keyboard. . Completely erase your "data diskette". (Do this by using the PC-DOS FORMAT command - refer to your PC-DOS manual for instructions.) . Return to BASICA by typing the word "BASICA" at your keyboard. . Rerun SETUP Option 1 again, this time being careful not to make mistakes. The correct listing from SETUP Option 1 is to be used while running SETUP Option 2, described below. SETUP OPTION 2. Several of the CPA-LEDGER computer programs need information that does not change from month to month. An example is your business name. Every time a financial statement is prepared, CPA-LEDGER needs to know your business name so it can be printed at the top of the page. One way to handle this type of problem is to ask you to enter the name every time CPA-LEDGER needs it. But there is a better and easier way. And, that is the purpose of Option 2. Option 2 asks you to enter several account numbers and your business name. CPA-LEDGER permanently stores your input in its memory and automatically fetches it, at a later time, when needed. Information needed for this option is shown in the printed output from SETUP Option 1. 9 SETUP OPTION 3. Option 3 assigns dollar values to accounts that you identified in Option 1. Don't worry. CPA-LEDGER makes sure that your debits equal your credits. It will not let you start your electronic books unless dollar debits equal dollar credits. Information needed for this option is also in the printed output from SETUP Option 1. AN OVERVIEW OF THE "DAILY" MENU. The DAILY menu is for your daily work. Use it AFTER you have selected and executed Options 1, 2, and 3 of the SETUP menu. "DAILY" provides functions such as adding daily transactions to your electronic books, listing the bank deposits and checks written, printing both a trial balance and financial statements, and analyzing the financial statements. To start the DAILY menu use your keyboard to enter the following command, as you see it below: RUN "DAILY" In a few seconds, the DAILY menu will appear on your computer screen: CPA-LEDGER DAILY MENU SELECT ONE OF THE OPTION NUMBERS BELOW. 1. ENTER NEW TRANSACTIONS IN THE GENERAL LEDGER. 2. PRINT AN UNADJUSTED TRIAL BALANCE. 3. PRINT AN INCOME STATEMENT AND A BALANCE SHEET. 4. PRINT TRANSACTIONS THAT HAVE BEEN POSTED TO THE GENERAL LEDGER. 5. PRINT GENERAL LEDGER ACCOUNTS WITH DETAILS OF ALL DEBITS AND ALL CREDITS. 6. PRINT BANK DEPOSITS AND CHECKS WRITTEN (CHECK REGISTER). 7. PRINT GENERAL LEDGER ACCOUNTS AND THEIR BALANCES. 8. ADD NEW ACCOUNTS TO THE GENERAL LEDGER. 9. PRINT A POST-CLOSING TRIAL BALANCE. 10. STOP ALL CPA-LEDGER PROCESSING AND RETURN CONTROL TO PC-DOS. WHICH OPTION NUMBER DO YOU SELECT? _ You may select any of the above options, in any order desired. A brief summary of each option follows. 10 DAILY OPTION 1. Option 1 is used to enter daily transactions in the general ledger. It is also used to enter adjusting entries in the general ledger prior to preparing financial statements. CPA-LEDGER uses these transactions and adjustments to prepare all printed reports, such as a trial balance, a Balance Sheet, and a check register. Here is a point that you should remember. As mentioned above, Option 1 is used to enter adjusting entries in the general ledger. DO NOT USE OPTION 1 TO ENTER CLOSING ENTRIES! CPA-LEDGER DOES THAT FOR YOU, AUTOMATICALLY. REMEMBER, USE CPA-LEDGER FOR RECORDING DAILY TRANSACTIONS AND ADJUSTING ENTRIES ONLY. CPA-LEDGER AUTOMATICALLY PREPARES THE CLOSING ENTRIES. Appendix D discusses adjusting and closing entries. Our experience has proved the wisdom of entering transactions (some call it "posting") in the accounting records as soon as possible after they occur. They are fresh, details are still clear, and it is easier to decide which accounts are involved. Develop a habit of using Option 1 on a regular basis, daily if possible. DAILY OPTION 2. Option 2 prints a general ledger unadjusted trial balance. Do not confuse 2 with Option 9. An Option 2 trial balance is one that shows the status of all accounts BEFORE adjusting and closing entries are posted to the general ledger. An Option 9 trial balance, on the other hand, is one that is prepared after posting all adjusting and closing entries. Use Option 2 anytime you want to review your general ledger accounts and to determine their current balances. Likely, you will want to do this at the end of each month. DAILY OPTION 3. Use Option 3 whenever you want an Income Statement and a Balance Sheet. Both financial statements are printed whenever you use Option 3. The Income Statement is printed first, followed by footnotes to the Income Statement, followed by the Balance Sheet, followed by footnotes to the Balance Sheet, and , finally, followed by a ratio analysis of the Income Statement and the Balance Sheet. In almost all cases, adjusting entries are needed before preparing an Income Statement and a Balance Sheet. Use the following procedure for 11 preparing these financial statements: . Return to PC-DOS and use DISKCOPY to make a copy of your "data diskette". Your PC-DOS manual explains how to use DISKCOPY. . Return to BASICA and then to CPA-LEDGER, as previously explained in Chapter 1. . Use the COPY of your "data diskette" to record your adjusting entries (Option 1) and for the data to be used by CPA-LEDGER in preparing the Income Statement and the Balance Sheet (Option 3). By using a COPY of your "data diskette", the ORIGINAL "data diskette" will be unaltered. Continue using the ORIGINAL diskette until the end of the year. Keep both diskettes at the end of the year, for your records. DAILY OPTION 4. Option 4 is for selecting and printing transactions that you previously added (posted) to the accounts. You can select transactions based on dates, account numbers, dollar amounts, check numbers, or document numbers. Or, you can print all transactions. The choice is yours. This capability comes in handy if you want to review a previously entered transaction. An example might be to determine which entries were made on a particular date. Or, you might want to know if a check has been posted to the records. The list is endless. Whatever your reason, CPA-LEDGER will scan the entire general ledger and search for the transaction. If found, it will be printed, exactly as you entered it, with account titles. DAILY OPTION 5. Use this option whenever you want to review a particular general ledger account. The printout shows every transaction that either increased or decreased the account balance. You can limit the printout to any period you wish - a month or a range of months. Or, if you wish, the printout will be for all transactions regardless of when they were entered in the system. DAILY OPTION 6. Option 6 prints a complete list of all transactions that have either increased or decreased your bank account(s). Each bank account is treated separately, with a separate printout. 12 Like Option 5, you can limit the printout to any period you wish - a month, a range of months, or the entire accounting period. This option may be used for several purposes. For example, you may use it to assist in preparing your bank reconciliation. Or, perhaps you will need to determine if a particular check or deposit has been entered in the system. DAILY OPTION 7. Option 7 prints a complete listing of general ledger accounts. The listing includes ALL accounts - including those that are not currently in use. If you want to add another account to the general ledger, get the account number from an Option 7 printout. Then use that account number in Option 8. As you will see from the printout, CPA-LEDGER automatically adds account numbers for your future use. DAILY OPTION 8. Use this option whenever you want to add an account to the general ledger. Get the account number from Option 7. CPA-LEDGER will ask you for the new account title and will inquire whether the account normally has a debit or a credit balance. Be careful in entering this information. Your input is displayed for your review and approval. However, once you approve your input, there is no CPA-LEDGER provision for subsequent corrections. So, be careful. Make sure that your input is absolutely correct before you tell CPA-LEDGER to use it in setting up a new account. There is only one possible way to correct a mistake that is introduced through using Option 8. It is painful, but here it is: . Discard the original copy of your "data diskette". It is of no further value and data on it will not be used again. . Get the latest backup of your "data diskette". The backup will be updated (below) and be used as the original "data diskette". . Return to PC-DOS (by typing SYSTEM at your keyboard) and use the DISKCOPY command to copy the backup "data diskette". Your PC-DOS manual has instructions on how to use DISKCOPY. . Return to BASICA (by typing BASICA at your keyboard) and then to CPA-LEDGER (by typing RUN "DAILY" at your keyboard). Use Option 1 and the copy of the "data diskette" to reenter all transactions that are on the original "data diskette" but there are not on the backup copy. 13 . Use Option 8 again - this time being careful not to make a mistake. . Do not forget to backup your new "data diskette". The more that you use microcomputers, the more you will come to understand the IMPORTANCE of FREQUENT BACKUPS. We could have provided an option in CPA-LEDGER for correcting previous input. However, that opens the door to potential problems and it destroys the audit trail built into the system. We decided that it would be much better to tell you to be careful while using Option 8. Consult with your local CPA. He or she will inform you about the importance of a clear and uninterrupted audit trail. DAILY OPTION 9. Use Option 9 at the end of the year, AFTER Option 1 has been used to enter the adjusting entries and AFTER all formal financial statements have been prepared. The information shown in the Option 9 printout is used as a basis for starting a new general ledger for the coming year. (Appendix D contains more details about accounts to be included in your new general ledger.) DAILY OPTION 10. Option 10 returns control to PC-DOS. This is the ONLY way that you should discontinue CPA-LEDGER's processing. NEVER, NEVER, UNDER ANY CIRCUMSTANCES, STOP CPA-LEDGER BY PRESSING THE "Ctrl-Break" KEYS! Always allow CPA-LEDGER to process completely and to return you to the DAILY menu. BACKING UP YOUR DATA DISKETTE. Each time you use Options 1 or 8, BE SURE to make a duplicate copy of your data diskette. After your use Option 10 for returning control to PC-DOS and the "A" prompt appears on the left of your screen, place your PC-DOS diskette in Drive "A" and give the following command at your keyboard. (Play it safe and consult your Disk Operating System manual to to SURE the command is the proper one for your microcomputer.) DISKCOPY Follow the instructions that will appear on your computer screen.