General accounting

In a typical store, the employees resell products to customers for a profit, after buying the products from suppliers.

To manage the store, you must keep track of all five concerns: your employees, products, customers, profit, and suppliers.

Each requires its own computer program. To compute what to pay your employees, get a payroll program. To monitor which products you have in stock, get an inventory program. To keep track of what your customers owe ó how much youíre supposed to receive from them ó get an accounts-receivable program. To compute your profits, get a general-ledger program. To handle debts to your suppliers and figure out how much to pay, get an accounts-payable program.

So altogether, you need five programs: payroll (PR), inventory (INV), accounts receivable (A/R), general ledger (GL), and accounts payable (A/P). Letís look at them more closely.


The payroll program writes paychecks to your employees. It computes how much each employee earned (the employeeís gross wage), then subtracts various deductions, and writes the difference (net pay) onto the paycheck.

It handles several kinds of deductions: the federal withholding tax (FED), the Federal Insurance Contributions Actís social-security tax (FICA SOCSEC), state taxes, local taxes, and payments to health and pension plans.

It prints checks to the government, to pay the taxes that were deducted and your stateís unemployment insurance. At the end of each quarter and year, it fills in all the payroll-information forms that government bureaucrats require.

If the programís fancy, it counts how many employees are in each department of your company, totals how much money each department is spending for labor, and keeps track of employee vacations and attendance records.

Before buying a payroll program, check whether it includes a table that lets it automatically compute your stateís income tax.


The inventory program counts how many products are in stock.

It prints each productís sales history, predicts when each product will sell out, and notices which products are generating the largest profits. By analyzing all that information, it determines which products to reorder and in what quantities.

For each product it says to reorder, it prints a purchase order, to mail to the supplier. It keeps track of whether the supplier has sent the requested goods.

At the end of the year, it totals the dollar value of all the products in the inventory, to help compute the value of your business and your tax.

Accounts receivable

The accounts-receivable program computes how much each customer owes. For each customer who pays immediately, the program prints a receipt; for customers who plan to pay later, it prints a bill (for services) and an invoice (for goods).

It notices which bills and invoices have been paid. It sends dunning notices to the customers who are late in paying ó the ones that are past-due. It refuses to accept orders from customers who are past-due or reaching their credit limit.

It computes a finance charge for customers who pay late. It gives discounts to customers who pay quickly or buy large quantities.

It records each customerís name, address, phone number, and buying habits, so your sales force can talk the customer into buying even more. It records your salespersonís name, and computes the salespersonís commission.

Before your company services a customer, the program gives the customer a written estimate of the cost.

General ledger

The general-ledger program computes the companyís profit, by combining info from the other five programs. It prints a variety of profit reports for your stockholders, bank, financial planners, and government. The reports show the results for the day, week, month, quarter, and year.

It tracks each departmentís budget, to make sure that no department spends too much. To protect your money from being stolen or embezzled or lost, the program performs double-entry bookkeeping: whenever it credits money to one account, it debits the same amount of money from another account, so that the books balance.

If the programís fancy, it stores your businessís history for the last several years. It compares your current profit against earlier profits, and each current budget item against previous budgets. It tells how much your business is improving or declining. It even tries to predict your businessís future.

Accounts payable

The accounts-payable program prints checks to your suppliers, to pay for the products they sent you.

The program delays payment as long as a supplier allows, so that you can temporarily invest that money in your own business, without requiring bank loans. Thatís called, "making full use of the supplierís line of credit".

The program stores each supplierís name, address, phone number, product line, and discount policy, so that you can purchase easily and wisely.

Which accounting package to buy

Now the most popular package for general accounting is Quickbooks. Itís popular because itís much easier than competitors. It tries real hard to hide accounting jargon from you, so you donít have to read about "debits", "credits", and "double-entry bookkeeping". Itís ads brag that Quickbooks gives you "No debits and credits, just plain English."

It tries to view your entire business as just a bunch of checkbooks. Itís published by Intuit, which also publishes Quicken, the worldís most popular checkbook-balancing program.

The first version of Quickbooks was incomplete, but the newest versions contain lots of features. Yes, Quickbooks now handles all 5 accounting functions (payroll, inventory, accounts receivable, general ledger, and accounts payable) and is flexible enough to handle many situations.

You can get either the standard version ($100) or the Pro version (which adds time-billing, estimating, and job-costing and costs $200). You can get Quickbooks on either floppy disks or a CD-ROM. (The CD-ROM contains extra tutorials and reference materials.)

Not sure whether you want Quickbooks? Then get a trial version free (with free shipping, too!) by phoning Intuit. The trial version contains the full features and can be used 25 times, after which it self-destructs. Any data you generate with the trial version can be transferred to the full version.

For more info, phone Intuit in California at 800-446-8848 or 415-944-6000.

The next step up is Peachtree Complete Accounting. 20 years ago, back in the 1970ís, Peachtree was the first full-featured accounting program for microcomputers. It used to cost about $5,000; but because of competition from newer, cheaper packages (such as Dac Easy Accounting and later Quickbooks), the price has dropped to $200, and the quality has improved further. At $200, itís a terrific bargain. It uses traditional accounting jargon but tries to explain it well. Itís harder for novices than Quickbooks, but it makes accountants feel more comfortable. You can buy a stripped-down version, called Peachtree First Accounting, for just $50; but if youíre going to strip you should get Quickbooks standard instead, which wins all awards from reviewers whoíve strip-searched. For more info, phone Peachtree Software (which was bought by ADP) in Georgia at 800-228-0068 or 770-724-4000.

The next step up beyond Peachtree Complete Accounting is Businessworks PC, available from State-of-the-Art Accounting Software in California at 800-447-5700.

Frankly, the only accounting package Iíve ever seen that was very easy was Dac Easy Light. It was delightful and came in a box that looked like a can of Light beer. Discount dealers sold it for just $42. But it was limited: it couldnít handle payroll or inventory, couldnít handle big companies (since it limited most of its database files to 500 records each), and didnít print well on laser printers, though it handled dot-matrix printers fine. It used MS-DOS without Windows. (A Mac version was invented but was more confusing.) Itís been discontinued. I wish somebody would imitate it and "do it right".

Many uncomputerized companies do accounting by using "One-Write" checks, which are checks that have a stripe of carbon paper across their backs, to copy handwritten checks onto the correct ledger pages. One-Write Plus is a program that makes the computer imitate that system. Folks who were used to the manual system like One-Write Plus. It was published by Evergreen Software, then by NEBS, and now by Peachtree. Itís not as full-featured as Quickbooks or Peachtree Complete Accounting.

Two kinds of accounting

There are two ways to do accounting: conservative and cowboy.

The conservative way is to do double-entry bookkeeping, which records each transaction as a "credit" to one account and a "debit" from an offsetting account. That forces the books to balance and prevents any department from going over budget or stealing money.

All "professional" accountants use that conservative method. But itís tedious and hard for a novice to fully understand.

If the company is small enough so the president knows all employees personally, watches their work, personally approves all payments, and has a good gut feel for how the business is doing, the conservative "double-entry" method is an unnecessary waste of time. Instead, the president can just total all payments that the company received, total all checks that the company wrote, total the value of the inventory, and report those totals to the government at tax time ó after breaking down those totals into subcategories that the government requires. The president can do it all easily with a pocket calculator or spreadsheet program (such as Excel) or database program (such as Q&A). That approach is called cowboy, because itís quick but suffers from a dangerous lack of controls.

Most small companies having fewer than 10 employees use that cowboy approach ó and so do I! That approach is reasonable just if the president is personally involved in all facets of the companyís day-to-day operations and has enough common-sense wisdom to compensate for a lack of computer-generated analyses.

Accounting hassles

Though some companies use Quickbooks and other standard accounting packages, most companies donít, for four reasons:

1. To understand accounting packages fully, you must understand the theory of debits and credits, which is complicated.

2. Those accounting packages work best if your companyís an intermediary that buys from manufacturers and resells to stores.

If you run a retail store where most customers pay cash, youíll complain that the accounting packages donít automate your cash register or automatically copy data from cash-register slips to the sales records and inventory module. If you run a non-profit organization, youíll dislike how the accounting packages keep bragging about your "profit" instead of how much youíre "under budget". If you run a doctorís office, youíll regret that the accounting packages donít record your patientís medical histories and needs, donít fill in the forms that your patientís insurance companies require, and donít handle multiple payers (in which the patient pays part of the bill and several insurance companies split the rest of the bill). If you run a consulting firm that dispenses services rather than goods, you typically wonít need inventory or accounts-payable modules, and many items in the other modules will be irrelevant.

3. Each company does business in its own unique way, whose peculiarities canít be handled well by any general-purpose accounting package.

For example, your company may have a unique way of offering discounts to customers. To make the computer automatically compute those special discounts, you must write your own program; but then youíll have difficulty making your program transfer that discount information to the accounting package you bought.

Because of each companyís uniqueness, the typical company avoids generic accounting packages and instead hires a programmer to write a customized program, by using a language such as BASIC or DBASE.

4. General-purpose accounting packages print standard reports but donít let you invent your own. Instead of using the reports generated by general-purpose accounting packages, many managers prefer to design their own reports, by copying the companyís data into a spreadsheet program (such as 1-2-3, Quattro, or Excel) or data-management system (such as Q&A, Approach, Access, or DBASE) and then "fiddling around" until the report looks pretty. General-purpose accounting packages donít let you fiddle.

Specialized accounting

If you have just one accounting problem to solve, you can buy a simple, pleasant program to solve that problem.


To balance your checkbook, get Quicken. It can also write the checks and report how much money youíve spent in each budget category.

You can get Quicken for MS-DOS, Windows, the Mac, and Apple 2. Discount dealers sell each standard version for about $25. "Deluxe" versions are also available, at greater cost.


For help in completing your 1040 Federal Income Tax form and all the associated schedules (A, B, C, D, E, etc.), get Turbo Tax ($28 from discounters) or Tax Cut ($18 from discounters). Turbo Tax gets you through the computations faster and is generally the best, though Tax Cut occasionally dishes out more personal advice. A "Deluxe" version of each program is also available, at greater cost.

Home finances

To help keep track of your mortgage, life insurance, stocks, credit-card bills, and other aspects of modern consumerism, get Managing Your Money ($20 from discounters).

Besides doing accounting, it also dishes out advice on how you should invest your money. For example, to determine your life-insurance needs, it asks many questions about your lifestyle and predicts when youíll die! Try it: buy the program and find out when the computer says youíll croak.

Mail Order Wizard

If youíre running a moderately large mail-order company, get a program called Mail Order Wizard. It handles order fulfillment well: it makes sure the goods are in stock, automatically computes the shipping charges (based on the weight of the goods and the packaging), bills the customers, and keeps track of which ads and catalogs are the most profitable. It also has built-in morality: if an item is out of stock for more than 30 days, it automatically sends a notice to all customers who ordered the item and offers to cancel their orders and refund their money.

Itís published by Haven Corporation, a 17-person organization run by Bruce Holmes who, like me, gives 24-hour free help and has a strange sense of humor; itís the only accounting program that makes you laugh while youíre installing it. You also get a helpful newsletter that teaches you mail-order tricks, and the company runs a cheery annual conference where users get together and swap tricks about computers and the mail-order biz.

Mail Order Wizard is used by the mail-order divisions of many famous organizations, such as Ben & Jerryís Ice Cream, Famous Amos Cookies, Magellan Travel, the Frank Lloyd Wright Foundation, and the MIT Bookstore.

I became aware of this program when my brother Dan and his wife Linda discovered it, bought it, got thrilled, and dumped all the other accounting programs theyíd been using. Now theyíre rich ó their Eagle America router-bit company has become a multi-million-dollar mail-order business.

Iím still poor. Gee, maybe I should be using Mail Order Wizard too!

Unfortunately, Mail Order Wizard handles just one accounting task: order fulfillment. It does not deal with payroll and other overhead expenses. Its keystrokes are non-standard, though you get clear instructions on how to master them.

It can handle big mailing lists (up to 4 million customers) and big mail-order catalogs (advertising up to 5400 products).

Itís a bit pricey: $1895 for one computer, $2995 for a 2-computer network, $3995 for a 4-computer network, $5495 for an 8-computer network, and $6995 for an unlimited network.

If you canít afford $1895, buy a stripped-down version:

Version What it can handle Price

Wiz Kid 5,000 customers, 80 products $495

Wiz Kid Plus 10,000 customers, 200 products $995

Wizard Apprentice 20,000 customers, 5400 products $1495

Wizard 4,000,000 customers, 5400 products $1895

The Wizard can do credit-card approvals by modem; the stripped-down versions cannot. The Wizard and the Wizard Apprentice include the UPS manifest system (software that simplifies paperwork for shipping by UPS); the Wiz Kid and the Wiz Kid Plus do not.

For more info (or a $20 demo disk), contact Haven Corporation at 1227 Dodge Ave., Evanston IL 60202-1008; phone 800-676-0098 or 708-869-3553.