CPA-LEDGER by TRONOLONE & FOSTER, PC CERTIFIED PUBLIC ACCOUNTANTS 9108 VOLUNTEER DRIVE ALEXANDRIA, VIRGINIA 22309 COPYRIGHT 1985 TRONOLONE & FOSTER, PC ii DISCLAIMER. CPA-LEDGER (which includes the computer programs, the practice diskette, and the User's Manual) is distributed on an as is basis without warranty or guarantee. In no event will Tronolone & Foster be liable to you, any other person, or any other entity for any loss, damage, or compensation, for any reason, that is caused or is alleged to be caused by any part of the CPA-LEDGER system. This disclaimer applies to any and all copies of CPA-LEDGER that you may have, regardless of source. Disclaimed losses, damages, and compensation include, but are not limited to, regardless of reason, interruption of service; lost profits; lost savings; loss of business; inability to use or delays in the use of CPA-LEDGER upon initial receipt or anytime after it has been initially received; and anticipatory profits or consequential losses or damages related to use of the CPA-LEDGER computer programs, the CPA-LEDGER practice diskette, or the CPA-LEDGER User's Manual. PERMISSION TO COPY. Individuals and organizations are granted permission to copy the CPA-LEDGER computer programs, the CPA-LEDGER practice diskette, and the CPA-LEDGER User's Manual as a complete unit provided that (1) Tronolone & Foster is advised of the name and address of the individual or organization that receives the copy or copies, (2) no changes are made to the CPA-LEDGER computer programs, the CPA-LEDGER practice diskette, or the CPA-LEDGER User's Manual, and (3) the CPA-LEDGER computer programs , the CPA-LEDGER practice diskette, and the CPA-LEDGER User's Manual are distributed together, and (4) there is no charge in any form to the individual or organization that receives the copy or copies. USER-SUPPORTED SOFTWARE. If you find CPA-LEDGER to be of value, your contribution will be appreciated. ($35.00 is suggested.) The address is: Tronolone & Foster, PC Certified Public Accountants 9108 Volunteer Drive Alexandria, Virginia 22309 Your $35.00 contribution will also entitle you to: . CPA-LEDGER's footnote disclosure and financial statement analysis capability. See the discussion that begins on page 62 of this User's Manual. iii . Up to five hours of consultation, without a charge for the consultation, by mail or telephone (or in person if you are in the immediate area) on how to use CPA-LEDGER, on how to set up your accounting system, or in making changes to CPA-LEDGER's computer programs so that they will fit your unique needs. All consultations will be on a time available basis at the convience of Tronolone & Foster and will be between the hours of 7:30 PM - 10:00 PM (EST) weekdays and on weekends. All telephone toll charges and other out-of-pocket expenditures will be at the expense of the person or entity requesting the consultation. . Free maintenance of CPA-LEDGER's computer programs for a period of one year. The maintenance is limited to (1) correcting CPA-LEDGER's computer programs to eliminate processing errors that you may encounter and (2) correcting any errors that you may find in the CPA-LEDGER User's Manual. Upon finding any errors: . Notify us by stating: . Whether the error was found in the CPA-LEDGER computer programs or in the User's Manual. . If the error was found in the User's Manual, give the page number and what you believe to be the error. . If the error was found in the CPA-LEDGER computer programs: . Identify the Option number that you were using when the processing error occurred. . Identify the input that you used which caused the processing error. Be specific. . Describe the processing error. That is, what did the computer program do after you gave your input? We will use your input and attempt to reproduce the error so that a proper correction can be made. SEND T-W-O BLANK DISKETTES, WITH $5.00 FOR POSTAGE AND HANDLING. BE S-U-R-E TO INCLUDE YOUR RETURN ADDRESS. The corrected CPA-LEDGER computer programs (the complete set) AND the corrected CPA-LEDGER User's Manual will be recorded on your diskettes, which will be mailed back to you. Your diskettes will contain an up-to-date copy of the CPA-LEDGER computer programs and the CPA-LEDGER User's Manual, INCLUDING any enhancements that may have been made since you originally ordered CPA-LEDGER. If you send only one diskette, the corrected CPA-LEDGER computer programs, only, will be mailed back to you, unless you specifically request the User's Manual. If you do NOT include $5.00 for postage and handling, nothing will be mailed back to you until you do remit the charge for postage and handling. iv PREFACE While designing CPA-LEDGER, ease of use was an utmost consideration. We consistently refused to add capabilities that would complicate your day-to-day use of the system. At first, we planned to have general ledger, accounts receivable, accounts payable, and payroll in one set of computer programs. It soon became evident that most users (those who are not experienced accountants) had too much to remember. Too much technical accounting knowledge was required. It would take a professional accountant to keep accurate and orderly records. AN AUTOMATED GENERAL LEDGER AND FINANCIAL STATEMENT SYSTEM. CPA-LEDGER is an automated general ledger and financial statement system. Accounts receivable, accounts payable, and payroll are being developed as separate applications. That keeps things much simpler for you, the system user. Why develop a system that only professional accountants can use? CPA-LEDGER is designed for commercial non-manufacturing businesses which offer products for sale. Separate accounts can be set up for different product lines; however, the system is not designed to prepare separate financial statements for each of the product lines. Various businesses will find CPA-LEDGER useful. Some of them include retail merchandising businesses, grocery stores, hardware dealers, hobby supply shops, landscaping gardeners, and restaurants. You should know, however, that CPA-LEDGER is generalized in the sense that it was designed to meet the needs of a large number of businesses. There is no guarantee that it will meet your specific needs. Only you can make that decision. Use the "program" and "practice" diskettes and the blank diskette (see the INTRODUCTION and CHAPTER 1) to test the system. Then decide if CPA-LEDGER will satisfy your requirements. YOU SELECT ACCOUNT TITLES AND PREPARE THE GENERAL LEDGER ENTRIES. We did keep two of our original ideas. First, we wanted the user to be able to determine the number and the titles of accounts that would be in the system. That capability was retained. Second, we wanted CPA-LEDGER to have plenty of muscle in the area of recording even the most complex business transactions. To do that, it soon became evident that a single-entry, canned approach for classifying transactions was not satisfactory. There were too many limitations for today's complex business environment. v Regardless of the canned approach used, there were plenty of transactions that just would not fit. Always, important transaction possibilities either had to be ignored, or, possibly, misclassified if they did occur. So, we designed CPA-LEDGER to handle ANY transaction, regardless of its simplicity or complexity. To do that, you and CPA-LEDGER will form a team - you will supply the transactions and CPA-LEDGER will do the processing. ERROR CHECKING. You should know that, to make your job easier, CPA-LEDGER has extensive error checking capabilities. Here are a few. . The system will not accept input that is either too long or too short. Consider, for example, the explanation for a general ledger entry. If you try to bypass the explanation (too short), CPA-LEDGER will beep at you, tell you what you did wrong, and demand input. If you try to enter an explanation that is too long, the system will beep at you again and demand that your input be the proper length. And, all of this is automatic. . CPA-LEDGER will not accept a transaction unless the dollar values of debits and credits agree. If they do not agree, the system will tell you what is wrong and tell you to correct the information. Thus, your electronic books will always be "in balance". . Before debit and credit dollars are accepted (assuming that debit dollars equal credit dollars), CPA-LEDGER lists on your computer screen the entire general ledger entry, including account titles. Then, you can accept or reject the entry. CPA-LEDGER lets you decide before it posts your books. . All dollar entries (such as dollar amounts of transactions) are verified before they are accepted. . All calendar date entries are verified. . CPA-LEDGER will not let you add (post) transactions to a general ledger account that is not included in your chart of accounts. This means that you will not have "lost" transactions - lost because of being added to a nonexistent account. . CPA-LEDGER will not let you start a new account with an improper opening balance. It knows, for example, that you should not start the account Cash On Hand with a negative amount. It monitors your input and detects this type of error. vi . CPA-LEDGER will not let you change an account's opening balance, once you open the account with a dollar amount. Nor will it let you erase or change the way a transaction is recorded, once that transaction is accepted by the system. This provides an audit trail and gives you a complete record of everything that went into the CPA-LEDGER. Imagine the confusion if you (or someone else) changed previously recorded data. What a mess that could be. So, CPA-LEDGER simply will not allow it to happen. Order is the word, with everything fully documented and permanently recorded. SOME OTHER CPA-LEDGER FEATURES. How frustrating it is to be using a microcomputer and have to constantly refer to a user's manual for technical explanations of error codes or for instructions on what to do next. This is not only frustrating. It is also inefficient. We solved a large part of that problem. As you use CPA-LEDGER you will notice that: . You will have a choice of having CPA-LEDGER brief you, in simple unstandable English, on what it is about to do - before it does it. This briefing contains an explanation of all of the types of input that will be expected. You will know what will happen, before it happens. . When CPA-LEDGER expects more than one item of input on a line, complete instructions appear above that line. . When CPA-LEDGER expects one item of input on a line, complete instructions appear on the same line. . CPA-LEDGER does not require long complex input. Instead, you enter brief understandable information and CPA-LEDGER does the rest - like using an account number to look up the account's title and telling you what will be done with your input. . If you make an error in giving your input, CPA-LEDGER informs you that you made an error. If necessary, it tells you what it found to be wrong, tells you what to do, pauses for you to determine the correct input, and then continues where it left off. . The system provides you with a printed copy of your input. If information on that printed copy is needed at a later time, the system will inform you to get the printout and will give you complete instructions on what to do. vii . When CPA-LEDGER needs another computer program, it tells you so and instructs you what to do - in simple English. If you do not follow the instructions properly, the system tells you what you did wrong and what you should do. . If CPA-LEDGER needs another diskette that is not in the disk drive, you are instructed what to do and how to do it. If you do not follow the instructions properly, CPA-LEDGER tells you what you did wrong and what you should do. . CPA-LEDGER tells you when it has finished processing and gives complete instructions on what you should do next. . A common mistake is for one to forget to turn on the printer. CPA-LEDGER watches for that and informs you if your printer is not ready. Then, it waits for you to do whatever is required. . CPA-LEDGER even tells you when to adjust the paper in your printer and how to adjust it. CPA-LEDGER also has plenty of muscle to record your daily transactions. For example: . Any one general ledger entry may have up to 30 debits and 30 credits. . Each debit and credit may have any value up to $9,999,999.99. . Total values of up to $999,999,999.99 may be printed on the printer. . Checks may be numbered from 1 to 999999 or any other combination of six characters (alphabetic or numeric, or a combination of both). . Documents that support a transaction may be numbered from 1 to 9999999999 or any other combination of 10 characters (alphabetic or numeric, or a combination of both). . You may use any combination of 1 to 30 characters to identify the payee of a check. viii . You may use any combination of 1 to 22 characters to describe the purpose of transaction. . You may use any combination of 1 to 30 characters as the title of a general ledger account. . Your general ledger may have up to 9,999 accounts. CPA-LEDGER's features do not stop there. After you establish your general ledger accounts and start recording your day-to-day transactions, the system will provide you with any number of useful products. For example, on demand, CPA-LEDGER will automatically: . List your chart of general ledger accounts. . Add new general ledger accounts. . Retrieve and print any general ledger entry that you entered into system. . Summarize your general ledger entries by general ledger account and report the results to you. . Provide you the status of any account. . Prepare a listing of all deposits and checks, by bank account. . Prepare a trial balance so that you may review the status of the accounts. . Prepare formal financial statements. . Allow you to add footnote disclosures to the financial statements. . Analyze the financial statements, using ratio analysis techniques. These are only a few examples. There are more. You will become familar with all of the features as you use the system. ix TABLE OF CONTENTS CHAPTER INTRODUCTION 1 PC-DOS Diskette 1 Program Diskette and Practice Diskette 1 Data Diskette 1 Drive A, Drive B, and DISKCOPY 2 Using CPA-LEDGER 2 Equipment Needs 2 PC-DOS Diskette and BASICA 3 Your Knowledge of Double-Entry Bookkeeping 3 Automatic Features 3 How This Manual Is Organized 4 1 CPA-LEDGER OVERVIEW 6 Menus - The Way to Access CPA-LEDGER Options 6 How to Begin Using CPA-LEDGER 6 An Overview of the "SETUP" Menu 7 SETUP Option 1 7 SETUP Option 2 8 SETUP Option 3 9 An Overview of the "DAILY" Menu 9 DAILY Option 1 10 DAILY Option 2 10 DAILY Option 3 10 DAILY Option 4 11 DAILY Option 5 11 DAILY Option 6 11 DAILY Option 7 12 DAILY Option 8 12 DAILY Option 9 13 DAILY Option 10 13 Backing Up Your Data Diskette 13 2 STANDARD MESSAGES AND REMINDERS 14 Printer Reminder 14 Data Diskette Reminder 15 Today's Date 16 CPA-LEDGER Briefings 17 3 SETUP MENU - OPTION 1 19 The SETUP Menu 19 What "SETUP" Options 1, 2, and 3 Ask For 20 What Option 1 Is Used For 20 What Option 1 Asks For 21 Option 1 Sequence of Execution and an Illustration 22 Error Messages 24 Printed Output 24 Practice 25 x TABLE OF CONTENTS CHAPTER 4 SETUP MENU - OPTION 2 27 What Option 2 is Used For 27 What Option 2 Asks For 27 Option 2 Sequence of Execution 27 An Illustration 28 Error Messages 29 Practice 31 5 SETUP MENU - OPTION 3 32 What Option 3 is Used For 32 What Option 3 Asks For 32 A Suggested Procedure 32 Option 3 Sequence of Execution 32 An Illustration 33 Error Messages 34 Printed Output 36 Practice 36 6 DAILY MENU - OPTION 1 37 The DAILY Menu 37 What Option 1 Is Used For 38 Option 1 Sequence of Execution 38 How to Discontinue Input for a General Ledger Entry 41 Reviewing And Approving Your General Ledger Entry 42 Getting Ready For The Next General Ledger Entry 43 Error Messages 44 An Illustration 47 Printed Output 50 Practice 50 7 DAILY MENU - OPTION 2 52 What Option 2 Is Used For 52 Footnote Disclosures 52 Practice 54 8 DAILY MENU - OPTION 3 55 What Option 3 Is Used For 55 Option 3 Sequence of Execution and an Illustration 55 Error Messages 59 Printed Output 60 Footnote Disclosures 62 Example of a Footnote Disclosure 63 Financial Statement Analysis 64 Ratios Prepared By Option 3 65 Sample Printout - Analysis of Financial Statements 65 Practice 68 xi TABLE OF CONTENTS CHAPTER 9 DAILY MENU - OPTION 4 69 What Option 4 Is Used For 69 Option 4 Sequence of Execution and an Illustration 69 Error Messages 72 Printed Output 72 Practice 73 10 DAILY MENU - OPTION 5 74 What Option 5 Is Used For 74 Option 5 Sequence of Execution and an Illustration 75 Error Messages 77 Printed Output 77 Practice 78 11 DAILY MENU - OPTION 6 79 What Option 6 Is Used For 79 Option 6 Sequence of Execution and an Illustration 79 Error Messages 81 Printed Output 82 Practice 82 12 DAILY MENU - OPTION 7 83 What Option 7 Is Used For 83 Option 7 Sequence of Execution and an Illustration 84 Error Messages 85 Printed Output 85 Practice 86 13 DAILY MENU - OPTION 8 87 What Option 8 Is Used For 87 Option 8 Sequence of Execution and an Illustration 88 Error Messages 91 Printed Output 93 Practice 93 14 DAILY MENU - OPTION 9 94 What Option 9 Is Used For 94 Option 9 Sequence of Execution 94 Error Messages 94 Practice 95 15 SETUP MENU - OPTION 4 AND DAILY MENU - OPTION 10 96 xii TABLE OF CONTENTS APPENDIX A - USING CPA-LEDGER WITH TWO FLOPPY DISK DRIVES 97 APPENDIX B - USING CPA-LEDGER WITH FIXED DISK 99 APPENDIX C - PREPARING YOUR DATA DISKETTE AND STORAGE CAPACITIES 100 APPENDIX D - SOME COMMENTS ABOUT AN ACCOUNTING AND BOOKKEEPING SYSTEM 103 Cash Versus Accrual Basis of Accounting 104 Procedures and Controls 105 The Accounting Cycle 106 Adjusting Entries 108 Reversing Entries 112 The Balance Sheet and the Income Statement 112 Account Classifications Used By CPA-LEDGER 113 Accounts To Be Included In Your Accounting System 116 APPENDIX E - SOME FORMS THAT MAY BE USED WITH CPA-LEDGER 117 Discussion 117 FORM 1 - Daily Cash Report 118 FORM 2 - Accounts Receivable Collections 120 FORM 3 - Other Cash Receipts 122 FORM 4 - Cash Payments for Merchandise Purchases 123 FORM 5 - Operating Expenses Paid in Cash (Other Than Salaries and Wages) 124 FORM 6 - Sales Returns Paid in Cash or Sales Returns Credited to Accounts Receivable 125 FORM 7 - Other Cash Disbursements 127 FORM 8 - Sales on Account 128 FORM 9 - Check Payments for Merchandise Purchases 129 FORM 10 - Operating Expenses Paid By Check (Other Than Salaries and Wages) 130 FORM 11 - Sales Returns Paid By Check 131 FORM 12 - Other Disbursements By Check 132 FORM 13 - Salaries and Wages 133 FORM 14 - Purchases on Account 135 FORM 15 - Purchase Returns 136 FORM 16 - Depreciation 138 FORM 17 - Other General Ledger Entries 139