Set up and operate a Computerized

Accounting System

Akaki Polytechnic College

Business Department

Tolesa F. (Lecturer)
Accounting &Finance
 Overview of accounting software applications

• Dear trainees! As you know accounting is

the process of identifying, measuring,
recording, and communicating economic
information about an organization or other
entity, in order to permit informed
judgments by users of the information.

2
• Accounting systems collect and process data from
transactions and events, organize them in useful
reports and communicate results to decision makers.
• Three main steps are involved in processing business
transaction.
– First, the financial information collected from
source documents (source document: an original
document containing information about a
transaction), verified, and analyzed to determine
how it will be recorded.
– Next, the transactions are recorded (manually
recorded in the journal or electronically in the
computer).
– Finally, reports are produced, analyzed and
summarized the financial information. 3
• In doing so, accounting systems
consists of people, records, methods,
and equipment.
• The systems are designed to capture
information about a company’s
transactions and to provide output
including financial, managerial and tax
reports.
• Computer technology provides accuracy, speed,
efficiency, and convenience in performing
accounting tasks.
• Therefore, accounting systems could be and
should be supported with technology, which can
be ranged from simple calculators to advanced
computerized systems.
• It can post transactions to the main record, called
the general ledger and within a second, the
computer produces financial statements of the
business.

5
• There are five basic components of the
accounting systems. They are:
– Source documents: Invoice and receipt are some of
the source documents.
– Input devices: input device capture information from
source documents and enable its transfer to the
system’s information processing component.
Keyboard, scanner, and mouse.
– Information processors: are systems that interpret,
transform, and summarize information for use in
analysis and reporting.
– information storages, and
– Output devices: are means to make information out
of an accounting system and make it available to
users. 6
 …continued
• In general, data processing involves converting a raw
data into an output as shown:
Input Processing Output
Raw Data Financial Product
 Master records - Invoice processing - Employees’ check
 Invoices - Payroll check writing - Inventory balance
 Standards/policies - Data entry and - Processed
 Payroll data recording records
 Sales invoice (this involves the use of - Financial
 Source documents journals, ledgers, trial statements and
balance, etc.) other processed data

7
 Computers – Nature
 Today, computers are used in almost all fields of
life’s endeavor.
 Computer application software are developed to
help humanity perform tasks with much ease.
What is computer?

A computer can simply be defined as an
electronic device that can accept data, store it,
process the data and is capable of giving output
(result).

8
 Components of computer
- It can be classified as:
1. Hardware
– Input Devices: input devices are used to enter data or
commands into the computer. E.g: keyboard, mouse, and
scanner.
– Storage Devices: These are used for data storage these include
primary (internal) and secondary (external) memories. Internal
memories are RAM and ROM where as external memories
include hard disks, floppy, CD, ROM, magnetic tapes, etc.
– Output Devices: As indicated, the result of processing is output.
Output can be shown on the monitor, it can be printed on
paper, and/or it can be stored on disk or other media.
• Therefore, the most common output devices can be monitor
and printer.
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2. Software
– System software: Controls the computer’s hardware.
• It manages the computer’s resources and makes the
hardware respond the user’s needs.
• System software includes the operating system, language
translators and utility programs.
– Application software: It is a task specific software.
• If you want to keep the books for a company, you use a
program such as Peachtree Accounting to enter information
regarding business transactions and to produce financial
reports.
• To do financial forecasting and perform “what if” scenarios,
spreadsheet program will be used.

10
Manual Vs Computerized Accounting Systems
In general, an accounting system includes the
processes and procedures by which an
organization’s financial information is received,
registered, recorded, handled, processed, stored,
reported, and disposed of.
Ω Manual accounting system is an accounting
system that performs data processing manually.
(It will be cost effective only for small firms)

Ω On the other hand, computerized accounting

makes use of computers to handle raw data,
manipulate the data, and report the results
quickly and accurately.
11
• Manual accounting is the system in which we keep
physical register of journal and ledger for keeping
the records of each transaction.
• In manual accounting, all calculation of adding and
subtracting are done manually.
• In manual accounting, we check the journal and
then we transfer figures to related accounts' debit
or credit side through manual posting.
• Both adjustment journal entries and its posting in
the ledger accounts will be done manually one by
one.
• We have to make the financial statements manually
by careful transferring trial balance's figures in
income statement and balance sheet.
Traditional / Manual system of
Accounting
 The need for accounting software
• Accounting is a formal method used by
businesses to collect, organize, process and
summarize data for reports and statements.
• Accounting is used to keep track of business
trends and to report relevant facts within the
business.
• Computer and business software allow more
efficient processing and organization of data.
• Computerized Accounting is software that runs
on a computer equipment to record, store and
analyze information on financial transactions
from internal and external operations of both
small and large businesses.
• Financial reports are automatically generated at
the end of each accounting period of a given
company.
• The computerized accounting eliminates paper
work making it easier and faster to collect, store
and trail all transactions as they occur.
 Benefit of accounting software
• A computerized accounting system has many
benefits, including:
• Improved Reporting To Financers - many
projects have more than one funding source,
each with specific and different requirements
such as: assisting with compliance with charity
regulations, etc.
• Minimal sign Mathematical Errors - with
computers doing the mathematics, errors are
virtually eliminated (unless the data is keyed in
improperly in the first instance).
• Better Record Keeping - human error can still
corrupt your data e.g. entering figures in wrong
fields, a good package will reduce this possibility
and ensure that there is a reference for all
transactions e.g. for every cheque or receipt
entered/created.
• However, this does not eliminate all manual work.
Vouchers, invoices, receipts etc. will still need to be
filed in a logical order and details of what was
entered onto the system should also be recorded
on paper.
• This will help when you need to track errors, in the
annual audit and if disaster strikes and you have to
re-enter all transactions.
• Automated Report Generation - Accounting
software has the ability to generate reports on
demand--something that could take a team of
humans hours or days.
• These reports can be customized to what the
company is spending money on, such as rent, day-
to-day operations, salaries and marketing.
• In addition, when used properly, this feature can
assist the business in its budgeting needs, telling
executives in a quick and easy to use format exactly
where their money is going.
• Reports empower executives to make informed
decisions, and having instant access to them can
only make success more likely.
• Data Security - For record-keeping and compliance
with the law, businesses often must keep financial
records for years.
• It is extremely difficult to keep copies of paper
records in multiple locations, and a catastrophic
incident that results in the destruction of paper
records can damage a business in many ways.
• With a computerized accounting solution, files and
important financial information can be stored
online or on off-site data cartridges--or both--
giving a business the level of redundancy that it
needs to recover from a catastrophe and ensuring
compliance with all applicable data retention laws.
• Faster and efficient in processing of information;
• Saving Time - with fewer errors and the software
automatically generating reports, time will be saved in
the long run.
• Saving Money - even though there will be the immediate
cost of the software, you are potentially saving the costs
of unnecessary audits as well as saving money through
time saved.
• Limiting Human Error - The biggest advantage of
accounting software for businesses is that most software
available has an automated system that checks for
mathematical errors.
• Errors in accounting can occur easily when done by hand.
• Having a system that is fully automated reduces the
possibility for human errors.
• Lower Cost - Accounting can become
expensive for businesses, as the level of work
can result in the businesses needing to hire an
accounting service on contract or hire several
full-time employees.
• Accounting software eliminates much of the
manual work, which may allow you to reduce
your full-time staff and lower your costs.
• Indeed, because so many tasks can be
automated, a full-time accountant may not be
necessary at all.
• With the larger reductions in the cost of
hardware and software and availability of user-
friendly accounting software package, it is
relatively cheaper like maintaining a manual
accounting system;
• More timely information can be produced;
• No more manual processing of the data- all
automatically been posted to the various
ledgers/accounts and
• Many types of useful reports can be generated
for management to make decisions.
 Disadvantage of computerized
accounting system
High initial cost investment to plan, install,
test, and implement the computer system
properly;

Thus, it may not be cost-effective for small
firms with lesser volume of data to process
Initial implementation may be time taking;
It requires specialized skill;
Slow acceptance may there be by
employees, clients, creditors, and auditors.
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 Advantages of computerized
accounting system
It enables to handle complex and large
transactions easily;
It increases efficiency, accuracy, speed, and
timeliness;
It reduces cost in relation to record keeping
(cost per transaction)
It handles large volume of data;
It enables efficient storage, computation,
retrieval, and auditability;
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 Selection of Accounting Software

• Should a firm develop its own

accounting software or buy in
externally supplied software?

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In-house software involves a software that is
developed by the firm internally considering
the needs of the firm.
Advantages of in-house software
development include:
It is ‘customized’;
Assurance of system compatibility;
Less training cost and implementation
time

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 …continued
• Off-the-shelve accounting packages are
accounting software that are acquired from
an independent vendor.
• Advantages of such off-the-shelve
accounting packages include:
 Low risk;
 Lower cost;
 Shorter implementation time;
 Standardization;
 Avoidance of an in-house effort
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Commonly supplied accounting software
include:
Peachtree* EXACT;
 QuickBooks; The Sun;

 ACCPAC(Acct Package); FAS(Fixed Asset

System);
OMICRON;

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How to select off-the-shelve accounting
packages?
Different selection criterion may be used to
acquire an off-the-shelve accounting
packages; such as:
Reliability;
Compatibility;
Security;
Flexibility;
Extent of training required;
Maintenance.
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 Peachtree Accounting Software
Peachtree is the most complete,
powerful and fully integrated
accounting system.
 It combines marketing and personal
information in order to provide with
necessary tools to efficiently control of
business operation.
 It is an accounting software package
developed to do the work of an
accountant. 30
Advantages of Peachtree
• It makes the work of an accountant easy
• It saves time
• It provides accurate and efficient analysis and
interpretation of financial statements when data is
correctly entered
• It generates financial reports automatically
• It prepares payroll automatically
• It facilitates accounts reconciliation for the company
• Peachtree gives the accountant the good reputation of
accuracy, efficiency, and effectiveness.
• In terms of certification, Peachtree boosts your profile,
enhances your chance of getting a job as an accountant,
it increases your marketing value, sustains your relevance
as an accountant in the world of finance and many other
benefits. 31
Determining System Requirements and Installation of Packages

This involves determining computer specific

hardware requirement the selected software
would require: such as memory capacity, speed,
etc. For example to install Peachtree accounting,
the following hardware requirements are
needed:
 A minimum Pentium processor of 150 MHZ;
 RAM: 32 MB or 64 MB (or more);
 Microsoft windows 95, windows 98, windows 2000;
 Hard disk with a minimum of 158 MB free space;
 Microsoft excel software installed.
 If multiple users exist to access company data, networked
computers are also required.
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Installing Peachtree
Software
• Multipurpose off-the-shelf (readymade)
software applications exist for a variety of
business operations.
• These include familiar accounting programs
such as Peachtree and QuickBooks.
• Off-the-shelf programs are designed to be user
friendly and menu driven, and many operate
more efficiently as integrated systems.
• In an integrated system, actions taken in one part
of the system automatically affect related parts.
• For instance, when a credit sale is recorded in an
integrated system several parts of the system are
automatically updated, such as posting to the ledger.
• Peachtree accounting software for windows use
accounting principles and work for all types of
businesses.
• It performs all steps in the accounting cycle, from
recording business transactions to generating
reports; in addition, the software can analyze
financial data and can provide time management.
• Hence, the software requires a minimum
hardware configuration.
• Besides, Peachtree software has many versions
depending on the advancements of Peachtree
software engineers and any body can purchase
the software and use.
 Installing Peachtree Software
• Dear trainees! This section deals about
installing Peachtree software on only one
computer.
• However, the software can also be installed in a
networked server.
• Installing Peachtree software on only one
computer, the Peachtree program files and
company data files will be put on that computer.
• In order to install Peachtree software like
other application software first we are
supposed to obtain a (licensed) copy of the
software (Peachtree Quantum) and install
on the system we want to use.
• The followings are the steps required to
install Peachtree programs.
• To install on a single computer:
Steps:
1. Exit all programs and disable virus-protection and
screen saver programs on your computer. This frees
up memory and avoids interference with the
Peachtree setup process.
 It’s important to consider the importance of the

following buttons, because almost each window will

have back, next, finish, cancel and help buttons.
 Thus, the buttons at the bottom of each window let you

go back, move forward, or cancel the setup process.

 The Help button gives you immediate assistance for the

current setup window.

 Click here to Click here Click here
Click here to move forward Click here to save to stop the for
move back your company setup. assistance.
one step.
one step. settings when
finished.
2. Insert the Peachtree compact disc in your CD ROM drive. The
Peachtree Auto run window automatically appears.
– If the Auto run window does not automatically appear, do the following:
From the Windows Start menu, select Run. Type "D:SETUP" and click OK.
(Substitute the appropriate drive letter for your CD-ROM drive.)
– Click the Peachtree Accounting install option.
– Read the information and instructions on the window, and then select
Next.
3. Read the License Agreement and, if you accept the terms,
select the Agree option. Select Next. (If you select
Disagree, you will exit the setup program when you click
Next.)
4. Then, Peachtree will notify you to disable anti-viruses by
providing the following dialog box. So, you have to temporally
turn off any anti-viruses and click ok.
5. After clicking the ‘ok’ button the installation progress shows
like as the following picture.
6. The Serial number window opens. Enter the serial
number on your CD cover here and click Next.
7. After the serial number entered and clicked the ‘next’
button, Standalone or Network window will appear. On
this window, you select whether or not you will be
installing Peachtree solely on the current computer or if
you will be installing it on more than one computer and
networking your computers.
– Select Yes if this is the only computer that Peachtree
will be installed on and click ‘Next’. That is, your
Peachtree company data will not be shared with other
computers on a network.
– Select No if you will be installing Peachtree on more
than one computer and you will be sharing your
Peachtree company data with the other computers on a
network and click ‘Next’.
8. The Set Peachtree Program Files Location
window appears, asking you to specify where you
want to put the Peachtree program files. You can
choose the folder where the Peachtree Accounting
program files will be installed. You must select a
drive on this computer at this point. You cannot
install Peachtree on another computer here.
– In the Peachtree program files box, enter the complete
path name of the location on the hard drive where you
want Peachtree installed—for example, C:\ProgramFiles\
SageSoftware\Peachtree. OR you can select the Browse
button to search for the appropriate drive and folder
name(s),and then click ‘Next’.
9. After creating the path of Peachtree program file locations, a
window, i.e., Peachtree Company Data Location will appear. If you
specified that your Peachtree company data files will be located on
this computer, you will see this window.
 Ensure that the location listed is correct and click ‘Next’. If the

location is not correct, you can click the Browse button and look
for another location.
10. Then after, a Components window will appear; note
that, this window will not appear if you are installing
a trial Peachtree program. To install desired
Peachtree components, follow these steps:
– In the Components list box, select the check box if you
want to install the sample company data.
– Click the Next button to continue. To stop and exit setup,
click the Cancel button.
11. The summary window will appear after clicking next
on the component window. This window simply tells
you where you have installed your Peachtree program
and Peachtree company data files.
 This window also allows you to choose to Add the

Peachtree desktop short cuts to the desktop, which

include the Peachtree program icon, Checks and Forms,
and Peachtree Knowledge Base; and/or you can choose
to Add an icon to the quick launch toolbar. If you need
to change anything, click Back. Otherwise, click Install
to install Peachtree.
12. After clicking the ‘Install’ button a picture shown at
the step ‘5’ also appear at this stage and you have to be
patient until it finished the installation. Note that, if you
are prompted by antiviruses that unknown program
changed your computer setups, you must allow certain
programs to run on your machine.

If these programs are blocked by firewall software,

Peachtree will not operate correctly.
13. After the installation completed the following window will
appear. This window may ask you to remove the Setup CD from
the drive and restart Windows. Select an option regarding
restarting Windows and then select the Finish button.
14. If you checked the box of ‘Start Peachtree Accounting’, you
will see the following window of Peachtree Accounting Program.
 Registering Peachtree

• Please register your copy of Peachtree as soon

as possible after installing the program.
Registration is very important because it
ensures you of timely program updates and
upgrade offers
1. Do one of the following:
– After your initial sessions working with Peachtree,
when you start the program, the Register Peachtree
Accounting window will appear,
 OR, if Peachtree is already running, select Peachtree
Registration from the Help menu.
2. Enter your Serial Number if not entered, Registration
Number and Customer ID.
3. When finished entering your registration information,
click OK to start using Peachtree.
Getting Started Peachtree
Accounting & Setting Up A
New Company
How to begin Peachtree accounting?
If Peachtree accounting is already installed into the
computer, it may be opened in two ways:
(i) Using Peachtree Accounting shortcut key;

Peachtree Complete Accounting.lnk

Double-clicking into this short-cut icon would open

Peachtree accounting program.
 …continued
(ii) Peachtree accounting program may also be
opened from the task bar (depending when
where the program is exactly located):
Start Programs Peachtree
Quantum 2010
Getting Started for Peachtree
Accounting System
Peachtree accounting may be used in two
cases:
To start an accounting system afresh for
newly established firm; or
In case of converting a manual accounting
system to computerized one.
 …continued
To start the use of Peachtree accounting
system, the first step should be to gather the
necessary information required to start the
system.
These include information such as:
 Company data such as address;
 The type of accounting system to be used: cash
basis or accrual basis;
 Beginning balances for balance sheet accounts;
 Creating a Company (Step 1)
In order to process accounting data, a company
should be created and the necessary
information should be entered.
The following items are usually requested while
creating a company:
 …continued
 Company name, address, business type;
 How to develop chart of accounts:
 whether to adapt a chart of account built-in within
the program or to develop own;
Accounting method to be adopted:
 Cash basis or
 Accrual basis accounting methods
 Posting Method: Batch Vs Real-time posting
 In batch posting, the transactions entered will be
saved to a temporary holding area without being
posted to ledger accounts immediately. This allows to
review and verify the transactions journalized before
posting the batch to the general ledger accounts;
 In real-time posting, the transactions entered or
journalized will be posted immediately to general
ledger accounts when the command ‘save’ is given.
 Length of accounting period to be adopted.
 Practice – Creating a Company
Opening Peachtree accounting program displays the following
startup screen with various alternatives of “what we want to
perform’.

This option is to be
used to open up an
already existing
company

This option is to be
used in setting or
creating a new
company that doest
not exist earlier
 …continued
When ‘setting up a new
company’ option is
chosen, the following
message box would
follow:

Click ‘next’ to proceed

with the procedures to
follow:
 …continued
Company’s information is
to be filled into the
following message box.

Fill in the required

data as much as
information
available and click
‘next’ to proceed
 …continued
In proceeding further Peachtree accounting
system provides an option as to how it is
preferred method to create your company:

This provides an option to maintain a

chart of account from illustrative
companies built-in in the system on
the basis of business sector involved

To build an own chart of account

for the newly created company,
choose this option and click ‘next’
to proceed with the process
• Following the accounting method to be adopted
should be select your business type:
 ..continued
Following the type of your business should
be selected from the following text box:

Choose either of the

accounting method according
to the accounting policy of the
company. Then, click ‘next’
to proceed.
 …continued
After the accounted method to be adopted is
selected, the desired posting method (as
chosen by the accountant) will be selected
from the following scenario:

The desired posting method would

be chosen by clicking and new
company creation process will
continue. Click ‘next’ to continue
 …continued
Continuing further, choose the desired
accounting period would be selected from:

Usually, a 12 monthly
accounting periods is
used. Click ‘next’ to
proceed
 …continued
Further, exact period when the fiscal period of the new
company, will be chosen from the following message
box:

By downing the arrows,

choose the right fiscal year
and month. Click ‘next’ to
proceed.
 …continued
Finish new company setup process
through the following text box:

Click ‘finish’ to finalize setting

up a new company.
 Accounting Software Application
Simplified Project for Peachtree and Quick Books
Project 2023
a. Setup a company on the basis of the following data:

Description Information
Company Name “Your Name” SOFTWARE Trading
Company Address Bishoftu
Business Type Share Company
Chart of Accounts Build your own
Accounting Method Accrual
Posting Method Smart posting
Accounting Periods 12 Monthly Accounting Periods
Fiscal Year begins January 2023
First month of data entry November [Period 11]
 Peachtree Window
Title bar

Main menu bar

 Opening a Company
Once a company is created, it may be opened in
two ways:
(i) Open a company within Peachtree
accounting windows; and
(ii) Open a company from the startup screen
(i) Opening a company within Peachtree accounting windows

An already existing
company may be
opened from ‘File’ menu
as follows:

Click ‘open company’ and

if many companies exist,
double click into the
name of the company
you want to open.
(ii) Opening a company from a startup screen
When Peachtree accounting
program is opened up, a
startup screen appears, and
an already existing company
may be created from there
by double clicking “open an
existing company”

Again, if many companies exist

being created into the
Peachtree accounting
program, choose the specific
company you want to open.
 Backing up Company Data
Backup refers to a duplicate softcopy of a data
into the hard disk, diskette, or other data storage
device.
Every record made into a company should be
backed up as frequently as possible.
Backup can be made in a diskette or other storage
device from ‘File’ menu.
 …continued

Clicking on the ‘backup’ option would result with another message box of the
following:
 …continued
Clicking on ‘Remind me..’ box enables
the program to remind you if company
data is not backed up for a specified
period of time as chosen.

If you want the company name to be

included in the backup file name, click
on this ‘include company name…’ box

To proceed with the backup procedure

‘backup’ box
 …continued

By dropping down the save-in box

choose the proper data storage
means into which the company’s
data is to be backed up.
Given proper file name for the
backup data that you can remember
easily.

Click ‘save’ and proceed.

 …continued
The system will indicate the
amount of storage space the
backup data will require.
If your storage means has
free space for the amount of
space indicated, click ‘ok’
and finalize the backup
procedure.
Now, the company’s data
recorded to date are backed
up into the storage means
indicated.
 Restoring Company Data
Restoring involves retrieving
information that was saved or backed up in
a given storage means.
Thus, restoring a company replaces all
information in the open company with the
entire backed up or saved information in a
given storage means.
 …continued
Therefore, when company data are lost for
various reasons or working computers are
changed, a data backed up in a given storage
means may be restored back to the hard disk
after opening up the given company restoration
of data is to be made.
Note: Restoration overwrites the most recent
data available into the company with the backup
data.
 …continued
Data restoration can be made
from ‘File’ menu as:
Clicking on ‘Restore’ options
results with another
message box where the
specific folder, hard drive,
diskette drive, or other data
storage device where the
Peachtree data are backed
up should be located. And
click ‘open’.
Explanation for Peachtree Main
Menu

Title bar

Main menu bar

 ‘File’ Menu
‘File’ main menu involves major commands such to:
Open an existing company;
 While one company is opened, it is possible to switch
from one company to another;
Create a new company;
Print data;
Backup company data;
Restore a data;
Import or export data from one program to
another;
Exit Peachtree accounting program.
 ‘Edit’ Menu
‘Edit’ menu helps mainly to edit company data and
it involves commands such as:
- Cut;
- Copy;
- Paste;
- Find transactions;
- Edit or delete records;
- Select or save memorized transactions;
- Display accounting behind the screen for the
selected transactions
- Add or remove line for transactions;
 ‘Maintain” Menu
It enables :
- To maintain customers ledgers;
- To maintain vendors ledgers;
- To maintain employees ledger;
- To maintain chart of accounts;
- To maintain inventory records or inventory ledger;
- To maintain job costs (job centers where costs and
revenues are to be accumulated specifically)
 ‘Task’ Menu
This menu is mainly used to enter and
process transactions and other data. It
makes recording on:
- Quotes;
- Sales orders;
- Sales invoices;
- Receipts
 …continued
- Credit memos;
- Purchase orders;
- Purchase receipt;
- Payments;
- Enter payroll records;
- General journal entries;
- Inventory adjustments;
 ‘Analysis’ Menu
It is mainly used to make graphical
analysis in relation to cash receipts
and cash payments;
 ‘Option’ Menu
This is used:
- To change general global set up of Peachtree
accounting (to change default setup on
Peachtree accounting);
- To change system date;
 ‘Reports’ Menu
This is a menu from which different reports from
Peachtree accounting are to be produced.
The reports include:
- Trial balance;
- Chart of accounts;
- Customers’ ledger;
- Vendors’ ledger;
 …continued
- Financial statements (balance sheet, income
statement, retained earnings statement,
retained earnings and income statement
combined);
- Inventory reports;
- Job reports;
- Account reconciliation
 ‘Services’ Menu
This involves a menu where different Peachtree
accounting information may be obtained
including Web and internet information.
 ‘Help’ Menu
This displays different troubleshooting manuals
in connection with Peachtree accounting.
- Peachtree accounting tutorial is available from
this menu;
- It also provides general information about
Peachtree accounting
 User Security
• The User Security feature is handled by a
number of windows that let you create a
company administrator, who has the right
to set up other company users, and then
enter and grant rights to those users.
 Setting up the first user
(administrator)
• In order to use user/password security in a
Peachtree company, you must first set up a
single user record.
• After that, all other users will need a user name
and password to access the company.
 The User Rights window appears.
• Enter a user name (for example, Admin) and its
corresponding password.
• Note: Passwords must be at least seven
characters. An example of a strong password:
MLsmith707!
• To give the user full access to the program plus
the ability to create individual users, select the
Administrator option.
• When finished, select OK.
 File Set up
– Understanding the type of accounts;
– Maintaining chart of account;
– Maintaining default information;
– Setting detail information;
– Using sales tax and payroll; and
– Understanding the accounting period.
• In Peachtree, the data takes two basic forms:
1.Maintenance data— information about the
company‘s, customers, vendors, employees,
inventory items, and jobs.
2.Task data— the daily transactions of
company‘s business (invoices, receipts,
purchases, payments, paychecks, and so
on.)
 Setting up Chart of Account
• An account may be defined as a record of the
increases, decreases, and balances in an
individual item of asset, liability, capital, income
(revenue), or expense.
• It is desirable to establish a systematic method of
identifying and locating each account in the
ledger.
• Accounts is a listing of the accounts by title and
numerical description.
• In Peachtree, the company's chart of accounts is a
complete list of all account names that will be
used in the General Ledger.
• Each account is associated with an account ID to
help locate it when recording data. Accounts are
used to classify transaction information for
reporting purposes.
• Chart of accounts can vary depending on the
business type.
• This categorization breaks the accounts into six
types of accounts. For a set of accounts with
four digits;
– 1000 – 1999 - Asset Accounts
– 2000 – 2999 - Liability Accounts
– 3000 – 3999 - Equity Accounts
– 4000 – 9999 - Revenue Accounts
– 5000 – 5999 - Cost of Sales Accounts
– 6000 – 6999 - Expense Accounts
 Steps to set up chart of accounts
• Step 1: Select the Chart of Accounts option from the
Maintain menu. Peachtree displays the following
Maintain Chart of Accounts window.
• Step 2: Enter an account ID and click ok or
press enter; and enter description for the
account. The account ID determines how the
account is identified and sorted in the chart of
accounts list. Most charts of accounts are set up
with specific account types grouped together.
• Step 3: Select an account type from the drop-
down list.
• Step 4: Select Save and New .
• Step 5: Select the Beginning Balances button
on the General tab. Peachtree displays the
Select Period window. Select the period in which
we want to enter beginning balances. We can
select from previous, current, or future periods.
• Step 6: Select OK. Peachtree displays the Chart
of Accounts Beginning Balances window. Click
or tab to any of the white cells in the grid to add
an amount. (The gray cells are for viewing
purposes only.)
• Step 7 : Select the OK button when finished.
• Step 8: Select close
Changing an Account Name or Description
1. Select the correct account from the drop-down
list in the Account ID field.
2. Highlight the current name in the Description
field, or click at the end of the name and
3. Use the Backspace key to delete the name.
4. Enter the new name or description.
5. Click the Save button.
 Adding an Account
• To finish setting up your chart of account,
you will probably need to add some
accounts.
Delete An Account
• To delete an account from the chart of
accounts, there must be no transactions
posted to the general ledger that references
the account ID.
• If an account has a nonzero balance, we can
delete or remove transactions associated
with it.
 Setting up Customer, Vendor, and
Inventory Defaults information
• Defaults are information or commands that
the software or operating system
automatically uses.
• Default information is good for all
customers, vendors, and inventory the
company deals with, but each customer,
vendor, and inventory will need special
treatment too.
 Setting Up Customer Defaults

• Customers are the people whom the

company sell products and services
• We can set up both default and specific
customer information.
 G/L Link Accounts Field
• The defaults are used to link sales income and
sales discount G/L accounts to most of your
customers. You change individual customer
setup, if necessary.
• G/L Sales Account: Enter or select the account
ID you want to use as the default sales (income)
account when entering customers.
• Discount G/L Account: Enter the number of the
account you want to use for discounts.
To set up payment methods for your customers or deposit ticket ID
properties, select the Payment Methods tab in the Customer Defaults
window.
Setting up Customers Default
SODARE Plc. accountants determined the Customers default
information as follow: Type of payment customers make:
•Due in number of days
•Net Due Days: 30
•Discount in Days: 10
•Discount Percent: 2%
•Credit Limit: 2,500
•Credit Status: Notify Over Limit
•G/L Sales Account: 4001 - Sales - Income
•Discount G/L Account: 4004 - Sales Discounts – Income
•Age Invoices By: Invoice Date
•Custom Fields: Un tick all fields
 Setting up Vendor Defaults
• Vendors are the suppliers, who sell their product
to the company that we do business.
• Thus we have to enter data relating to the vendors
as default information and data for each vendor.
Peachtree allows setting up default (common)
information for vendors.
• To set up or review vendor defaults, select
Default Information from the Maintain menu,
and choose Vendors .
 G/L Link Accounts:

• The defaults are used to link purchase

and Discount G/L Accounts to most
of your vendors.
 Setting up Vendors Default
SODARE PLC. accountants determined the Vendors
default information as follow:
Type of payment customers make:
•Due in number of days
•Net Due Days: 30
•Discount in Days: 10
•Discount Percent : 2%
•Credit Limit: 1,000,000
•G/L Expense Account: 1004 - Inventory
•Discount G/L Account: 5002 - Purchase Discounts
•Age Invoices By: Due Date
•Custom Field: Un tick all fields
•1099 Settings: Make all accounts ‗None‘
 Setting up Inventory Item Defaults

• Inventory represents the quantity (value) of

goods on hand and available for sale at any given
time.
• Inventory is considered to be an asset that is
purchased, manufactured (or assembled), and sold
to customers for revenue.
• To open Inventor y Defaults, Select Maintain ,
Default Information , Inventory It ems .
 Setting-Up Sales Taxes
• Sales taxes are amounts charged by a state,
country, locality or other agency on items
that you sell to your customers.
• Thus, before billing customers, you will
want to set up your sales taxes.
 To create your Sales Taxes
 Select Maintain , Sales Taxes .
 This will open the following Sales Tax Wizard.
 This wizard can also use to edit, view, and delete
sales taxes and sales tax agencies.
 After clicking NEXT, Set up New Sales Tax
wizard appear.
 Use this window to set up a new sales tax.
 Here, you will specify the total rate that you will
charge and how many individual rates make up
the total rate.
 Setting up Payroll
• Peachtree automates payroll process. Once
employee defaults, employee records, and tax
formulas are set up, Peachtree automatically
computes the paycheck.
• Then, it is possible to print a batch of checks for
all employees or print a single paycheck.
• The Payroll Setup wizard walks you through
setting-up most payroll defaults and standard
payroll fields.
 Setting up Payroll Default:
 To begin the Payroll Setup wizard, from the
Maintain menu, select Payroll and choose Payroll
Setup Wizard, then the figure depicted on the
next page will appear.
• Peachtree displays the Payroll Setup Wizard.
(Once you complete the wizard, its name changes
to Payroll Settings)
• The initial screens tell you about your options
for processing payroll with Peachtree:
• Full-service and in-house payroll.
• Choose Payroll Options: select do it yourself
In–House, because the other (Full Service
Payroll) only used in USA.
• Full Service Payroll: Peachtree Managed
Payroll by online service.
• Do It Yourself In-House: You can maintain
and update your payroll formulas and
calculations yourself.
• Enter Company Information:
 Setting-Up Payroll Default
• The following data are used to set up payroll default for
SODARE PLC thus, enter the followings in the
appropriate fields.
– Payroll Option: Select Do It Yourself In-House
– Payroll Option- Do it yourself In-House: select Do It Yourself
– State: Write OR
Pay Type:
• Hourly-Regular: Select 6012 Wages Expense
• Overtime: Select 6012 Wages Expense
• Salary-Salary : Select 6011 Salaries Expense
Taxes :
• Tax liability acct no : Select 2004 - Income Tax Payable
• Tax expense acct no : Select 6009 -Payroll Tax Expense
 User-Maintained Payroll Formulas
• There are two sets of payroll formulas in Peachtree:
Peachtree-maintained and user-maintained.
1. Peachtree-Maintained Payroll Formulas apply to
all the companies you have set up in Peachtree.
• They include predefined formulas containing
federal-, state-, and (some) local regulated tax
calculations maintained by one of the payroll tax
solutions for Peachtree.
2. User-Maintained Payroll Formulas are only used
by the specific company for which they are set up.
• Use the User-Maintained Payroll Formulas,
because the first one only applies to USA.
• To open User-Maintained Payroll Formulas
window, from the File menu, select Payroll
Formulas, then User-Maintained.
• Peachtree displays the following User-Maintained
Payroll Formulas window.
• User-Maintained Payroll Formulas are only
used by the specific company for which they are
set up.
 How do you classify this formula?

• To select either a Tax (income tax), a

Deduction (Pension), a Benefit (Insurance),
or Reimbursement (positive adjustment).
• The new Ethiopian income tax proclamation required to
calculate employees‘ income tax obligation based on the
following schedule.
• For example, if one employee gets a monthly salary of
Birr 1,450, his/her monthly income tax will be
((1,450×10%)-60) = 85.
Employment Income Tax Rate Deduction
0 600 exempted 0
601 1650 10% 60
1651 3200 15% 142.50
3201 5250 20% 302.50
5251 7800 25% 565
7801 10900 30% 955
Over 10900 35% 1500
 Employee Defaults
• Here (and in the Payroll Setup Wizard or Payroll
Settings), you enter basic setup information that
applies to most of your employees and payroll
transactions.
• Then, when you set up new employees and enter
paychecks, the default information is
automatically included. This can save a great deal
of time during data entry.
 TRANSACTIONS
Transactions are financial exchanges between a
business and its customers, vendors and other
people associated with a business.
•As we have seen Peachtree window, it has Menu
Bar on the top which includes the following menus
within its main window: File, Edit, Lists, Maintain,
Tasks, Analysis, Options, Reports & Forms,
Services, Window, and Help.
•Basically, we have used Maintain Menu when we
set up chart of accounts, default records,
maintained customers or vendors, and so on.
• In this, we will use Tasks Menu to
enter transactions and other task related
information, for instance,
– To enter invoices,
– Pay vendors,
– Receive payments from customers,
– Enter bank windows used to record
transactions; deposits,
– Pay employees, and
– Make adjustments to general journal.
Types of Journals
There are two types of Journals:
- Special Journal and General Journal.
Special Journals are used to record frequently occurring
and similar types of transactions. On the other hand,
general Journal is used to record infrequent and dissimilar
types of transactions.
In general, there are more than four types of special
journals:
•Purchase special journal,
•Payment/disbursement special Journal,
•Sales special Journal and
•Receipt Special Journal.
 Sales and Accounts Receivable
(Customers Transactions)
• If we want to enter a cash sale from customer, we
would use the Receipts window on the Tasks
menu, not the Sales/Invoicing window.
• The Sales/Invoicing window is for credit
customers only.
• If the transaction involves a credit sale, enter it in
the sales/invoicing window; if the transaction is
in cash, enter it in receipts window.
• Thus, sales/invoicing task is the sales journal .
whereas, the receipts task is the cash receipt
journal .
Entering Sales Invoices
• Invoices are document that lists the goods
shipped or services performed with their
price, and the terms of sale.
• Thus, sales invoices are documents that
list goods and services that customers
receive from the business.
 Receipts
• When customers‘ pays for goods and services sold
to them, we have to record the receipt.
• Most receipts are applied to sales invoices.
However, we can also enter cash sales (transactions
in which no invoice is entered or required),
prepayments, and customer refunds.
• This allows us to enter all checks, cash, and credit
card slips we receive and deposit them in checking
account.
• The process of entering a receipt is different
depending on whether the receipt is against an
invoice or a cash sale.
 Purchases and Accounts Payable
(Vendors Transactions)
• Peachtree organizes and monitors accounts
payable, the orders we make and the money we
pay to suppliers.
• When we enter and post inventory items, three
things happen:
– The amount of the item in stock is updated.
– The inventory value is updated.
– For stock items, the inventory account is debited to
offset the credit to Accounts Payable.
Payments (Cash Purchase or cash payment)
• This allows us to write checks for vendor invoices, for
payments that don't have a vendor invoice, and for
prepayments or discounts.
• The fields of the distribution box differ depending on
whether we are applying the payment to invoices or new
purchase. If a vendor has open invoices, the Apply to
Invoices tab will be in front.
• However, if we are entering a payment to a one-time vendor
not in the system, the Apply to Expenses tab is default.
There are two basic methods of paying vendors:
• Apply vendor invoices: pay invoices that were previously
entered in the Purchases window.
• Apply to New Purchase (cash purchase): pay a vendor
without using a vendor invoice.
General Journal Entry
• Journal Entry is an event that has a
dollar/birr impact on the company's
accounting records.
• Journal entries show the effects of
business transactions as expressed in
terms of debits and credits.
THANK YOU!

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