HAWASSA UNIVERSITY

AWADA BUSINESS AND ECONOMICS

COLLEGE
DEPARTMENT OF ACCOUNTING AND
FINANCE
Accounting Software Application( AcFn4122)
INDIVIDUAL ASSIGNMENT

MLKAMU AEMIRO...................................................................0523/13

submitted to ASEGID
G( PhD)

Submission date: May 2024

yirgalem
1). Discuss the basic procedures and steps that you need to follow when
setting up new company in Peachtree?

There are many ways to access the Create a New Company if you already have another
company file open. One popular way is to use the Peachtree's menu bar. To do this, select File
and choose New Company (or press <Ctrl> + <N> on your keyboard).

Now that you have opened the Create a New Company; If you are completing the
Peachtree Practice Set, you will find all the information required to set up your company data file
in the Creating the company data file page in your practice set. Remember to enter your full
name after your company name in the Company Name field!

Company Information; After clicking the Next button in the Introduction window, you are
required to enter essential information about your company. This information includes the
company name, address telephone number, business type and identification numbers. Once this
information has been entered, click Next.

Develop chart of accounts; whether to adapt a chart of account built-in within the program
or to develop own;

Setup; Next, you select a method to create your company. The most common choice is to select
'Use a sample business type that closely matches your company.' Then click Next.

Business Type; You are then instructed to select a business type so that the default chart of
accounts created for your company is appropriate for your business type. Scroll through the
'Select a business type' list and click on the appropriate business type. Once you are satisfied
with your selection, click Next.

Accounting Method; Next, you are required to select an accounting method - either accrual
or cash accounting. Be careful in your selection, because this is not able to be changed after you
have created your company data file. Click Next.

Posting Method; The next step allows you to choose whether transactions are posted at the
time the entry is saved (Real Time posting method) or whether the transaction information is
saved and then posted in a batch (Batch posting method) after they have been reviewed for
accuracy. This information can be edited after you have created your company data file by going
to Peachtree's main menu bar and selecting Maintain → Company Information. Click Next.
Accounting Periods; You are then required to choose whether your company has monthly
accounting periods, or accounting periods that do not match the calendar months. Click Next
once you have made your selection.

Fiscal Year; Next, you are required to select the first period of your fiscal year. Again, you
are unable to change this once you have created your company data file. Click Next once you
have made your selection.

Finish; You have now almost completed the Create a New Company wizard and should see the
window below:

2). Discuss the difference between the following terms:

Cash basis and accrual basis accounting.
Real time and Batch posting.
General journal and special journal.
Cash basis vs. Accrual basis accounting:
Cash basis accounting: This method records revenue and expenses when they are actually
received or paid. In other words, transactions are recorded only when cash changes hands. This
method is simple and easy to understand but may not provide an accurate picture of a company's
financial health.

Accrual basis accounting: This method records revenue and expenses when they are earned or
incurred, regardless of when cash is exchanged. It provides a more accurate representation of a
company's financial position and performance over a specific period. Accrual basis accounting
follows the matching principle, which matches revenues with expenses in the same accounting
period.

Real time vs. Batch posting:

Real-time posting: In real-time posting, transactions are entered and posted to the accounting
system immediately as they occur. This allows for up-to-date and accurate financial information
at any given time. Real-time posting is commonly used in modern accounting software to
provide real-time insights into business operations.

Batch posting: In batch posting, transactions are collected and processed in batches at specific
intervals, such as daily, weekly, or monthly. This method can be more efficient for processing
large volumes of transactions at once but may result in a delay in updating financial records.
Batch posting is often used in older accounting systems or in situations where real-time posting
is not necessary.

General journal vs. Special journal:

General journal: The general journal is a chronological record of all financial transactions of a
company. It includes details such as date, accounts affected, descriptions of the transaction, and
amounts debited and credited. General journals are used for recording non-routine or adjusting
entries that do not fit into specific categories.

Special journal: Special journals are used to record specific types of transactions, such as sales,
purchases, cash receipts, and cash disbursements. These journals help streamline the recording
process by grouping similar transactions together and reducing the need for multiple entries in
the general journal. Special journals are often used in larger companies with high transaction
volumes to improve efficiency and organization in the accounting process.

3). Discuss the basic procedures and steps that you need to follow when
maintaining chart of accounts in Peachtree?
Here are the basic procedures and steps you need to follow when maintaining a chart of accounts
in Peachtree:

1. Accessing the Chart of Accounts: Log in to your Peachtree account and navigate to the
"Maintain" menu.

- Select "Chart of Accounts" to access the list of accounts currently set up in your system.

2. Adding a New Account: To add a new account, click on the "New" button or select "New
Account" from the menu.

- Enter the account number, account name, and other relevant details such as account type, sub-
account of (if applicable), and any other necessary information.

- Save the new account to add it to your chart of accounts.

3. Editing an Account: To edit an existing account, select the account from the list and click on
the "Edit" button or choose "Edit Account" from the menu.

- Make the necessary changes to the account details, such as account name, type, or sub-account
relationships.

4. Deleting an Account: If you need to delete an account, select the account from the list and
click on the "Delete" button or choose "Delete Account" from the menu.
- Confirm the deletion to remove the account from your chart of accounts. Note that deleting an
account may impact your financial records, so proceed with caution.

5. Reorganizing Accounts: You can reorganize accounts in your chart of accounts by changing
the account numbers or adjusting the sub-account relationships.

- Use the drag-and-drop function in Peachtree to move accounts within the hierarchy or change
their order.

6. Running Reports: To review and analyze your chart of accounts, run reports such as the
Chart of Accounts Listing or General Ledger Report.

- These reports provide a detailed overview of all accounts in your system and their balances,
helping you monitor financial activity and track transactions.

4). What do you think is the importance of maintaining customer,

vendor and inventory default information in Peachtree?
Here are some reasons highlighting the importance of maintaining this default information:

1. Streamlined Transactions: By setting up default information for customers, vendors, and

inventory items, you can streamline transaction entry. The default information automatically
populates fields such as address, contact details, payment terms, and pricing, saving time and
reducing errors when creating invoices, purchase orders, or sales receipts.

2. Consistent Data Entry: Having default information for customers, vendors, and inventory
ensures consistency in data entry. This helps maintain accuracy in records and prevents
discrepancies that may arise from manual input errors. Consistent data entry also facilitates
reporting and analysis by providing reliable information.

3. Improved Customer and Vendor Relationships: Maintaining default information for

customers and vendors allows you to store important details such as payment terms, credit limits,
and preferred communication methods. This information helps in providing personalized service,
managing credit effectively, and building stronger relationships with customers and vendors.

4. Efficient Inventory Management: Default information for inventory items includes details
such as item descriptions, cost, selling price, reorder points, and units of measure. By setting up
this information, you can efficiently manage inventory levels, track stock movements, and ensure
accurate pricing for sales transactions.

5. Enhanced Reporting and Analysis: Default information stored in Peachtree/Sage 50 for

customers, vendors, and inventory items contributes to generating comprehensive reports. These
reports provide insights into sales performance, purchasing trends, inventory turnover, and
financial analysis. Accurate default information leads to more reliable reports for decision-
making.

6. Compliance and Audit Trail: Maintaining default information in Peachtree/Sage 50 helps in

compliance with accounting standards and regulations. Having detailed records of customer
transactions, vendor interactions, and inventory movements creates a clear audit trail for internal
and external audits.

5). Discuss the basic procedures and steps that you need to follow when
maintaining customer, vendor and inventory subsidiary ledgers in
Peachtree?
Maintaining customer, vendor, and inventory subsidiary ledgers in Peachtree (Sage 50) involves
several basic procedures and steps to ensure accurate and up-to-date records. Here are the key
steps to follow for each ledger:

Customer Subsidiary Ledger:

1. Set Up Customer Records: Enter detailed information for each customer, including name,
address, contact details, payment terms, credit limits, and any specific pricing agreements.

2. Record Sales Transactions: Create invoices, sales receipts, and credit memos for customer
sales. Ensure that all transactions are accurately recorded and linked to the respective customer
accounts.

3. Apply Payments: Record customer payments against outstanding invoices to update the
accounts receivable balance. Properly apply payments to specific invoices for accurate tracking
of outstanding balances.

4. Review Aging Reports: Regularly review accounts receivable aging reports to monitor
overdue payments and follow up with customers for collections if necessary.

Vendor Subsidiary Ledger:

1. Enter Vendor Information: Input detailed information for each vendor, such as name, address,
contact details, payment terms, vendor account number, and any special pricing agreements.

2. Record Purchase Transactions: Create purchase orders, bills, and vendor credits for purchases
made from vendors. Ensure that all transactions are accurately recorded and linked to the
respective vendor accounts.
3. Apply Payments: Record payments made to vendors against outstanding bills to update the
accounts payable balance. Properly apply payments to specific bills for accurate tracking of
outstanding balances.

4. Reconcile Vendor Statements: Periodically reconcile vendor statements with your records to
ensure that all transactions are accurately reflected and resolve any discrepancies.

Inventory Subsidiary Ledger:

1. Set Up Inventory Items: Create detailed records for each inventory item, including
descriptions, cost, selling price, units of measure, reorder points, and quantities on hand.

2. Record Inventory Transactions: Enter purchase orders, sales orders, inventory adjustments,
and transfers to accurately track inventory movements and maintain inventory levels.

3. Perform Inventory Counts: Conduct regular physical inventory counts to verify the accuracy
of inventory quantities on hand and make adjustments as needed.

4. Monitor Inventory Levels: Review inventory reports regularly to track stock levels, identify
slow-moving items, and ensure timely reordering of inventory to meet demand.

6). Discuss the following independent cases:

How do you record quotes in Peachtree?
How do you convert quotes in to sales order?
How do you record transaction related to cash and credit sales in
Peachtree?
How do you record transaction related to purchase order, credit and
cash purchase?
Recording Quotes in Peachtree:
1. To record a quote in Peachtree, you can create a sales quote by selecting the "Quotes" option
from the Sales Navigation Center.

2. Enter the customer information, item details, quantities, prices, and any other relevant
information in the quote form.
3. Save the quote in Peachtree to generate a quote number and keep a record of the quotation for
future reference.

Converting Quotes into Sales Orders in Peachtree:

1. To convert a quote into a sales order in Peachtree, locate the quote you want to convert under
the "Quotes" section.

2. Select the option to convert the quote to a sales order. This action will create a new sales order
based on the information from the original quote.

3. Review and confirm the details of the sales order, make any necessary adjustments, and save
the sales order in Peachtree.

Recording Transactions Related to Cash and Credit Sales in Peachtree:

To record a cash sale in Peachtree, create a new sales invoice by selecting the "Sales" option
from the Sales Navigation Center.

Enter the customer details, item information, quantities sold, prices, and payment method as
cash.

Save the sales invoice to record the cash sale transaction in Peachtree.

To record a credit sale, follow the same steps as above but select the appropriate payment
method as credit instead of cash.

Recording Transactions Related to Purchase Orders, Credit, and Cash

Purchases in Peachtree:
1. To record a purchase order in Peachtree, create a new purchase order by selecting the
"Purchase Orders" option from the Purchases Navigation Center.

2. Enter vendor details, item information, quantities ordered, prices, and any other relevant
information in the purchase order form.

3. Save the purchase order to generate a purchase order number and keep a record of the order
for future reference.

4. To record a credit purchase, create a vendor credit memo by selecting the "Vendor Credit
Memos" option from the Purchases Navigation Center. Enter the vendor details, item
information, quantities returned, and reasons for the credit.

5. Save the vendor credit memo to record the credit purchase transaction in Peachtree.
6. To record a cash purchase, create a new vendor bill by selecting the "Enter Bills" option from
the Purchases Navigation Center. Enter vendor details, item information, quantities purchased,
prices, and payment method as cash.

7. Save the vendor bill to record the cash purchase transaction in Peachtree.

7). Discuss the basic procedures and steps that you need to follow when
generating reports(general ledger trial balance, financial statements etc.)
in Peachtree?
. Here are the basic procedures and steps you need to follow when generating reports such as the
general ledger, trial balance, and financial statements in Peachtree:

Open Peachtree: Launch the Peachtree accounting software and log in to your company's
database.

Navigate to Reports: Locate the "Reports" menu or tab within Peachtree. This is where you can
access various reporting options.

Select Report Type: Choose the type of report you want to generate, such as general ledger trial
balance or financial statements.

Customize Report Parameters: Depending on the specific report you are generating, you may
need to customize parameters such as date range, account selection, and other relevant criteria.

Preview or Print Report: Once you have set the parameters, you can preview the report on
screen to ensure it meets your requirements. Alternatively, you can directly print the report.

Save Report: If needed, you can save the report in a preferred format for future reference or
distribution.