O'Reilly logo

QuickBooks 2013 For Dummies by Stephen L. Nelson, MBA, CPA

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Keying In on Profit

Start with the big picture. The key purpose of an accounting system is to enable you to answer the burning question, “Am I making any money?”

Accounting is that simple. Really. At least conceptually. So, throughout the rest of this appendix, I just talk about how to calculate a business’s profits in a reasonably accurate but still practical manner.

Let me introduce you to the new you

You just moved to Montana for the laid-back living and fresh air. You live in a cute log cabin on Flathead Lake. To support yourself, you plan to purchase several rowboats and rent them to visiting fishermen. Of course, you’ll probably need to do quite a bit of fishing, too, but just consider it the price you pay for being your own boss.

The first day in business

It’s your first day in business. About 5 a.m., ol’ Peter Gruntpaw shows up to deliver your three rowboats. He made them for you in his barn, but even so, they aren’t cheap. He charges $1,500 apiece, so you write him a check for $4,500.

Peter’s timing, as usual, is impeccable. About 5:15 a.m., your first customers arrive. Mr. and Mrs. Hamster (pronounced “ohm-stair”) are visiting from Phoenix. They want to catch the big fish. You’re a bit unsure of your pricing, but you suggest $25 per hour for the boat. They agree and pay $200 in cash for eight hours.

A few minutes later, another couple arrives. The Gerbils (pronounced “go-bells”) are very agitated. They were supposed to meet the Hamsters and fish together, but the Hamsters ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required