Page 558 - Introduction to Business

532 PART 5 Finance

To ensure the accuracy of the true cash balance based on the bank balance, you
must update your checkbook balance for items recorded by the bank but not
recorded by you. Begin with the checking account balance shown in your check-
book. Subtract any bank charges and checks that you deposited that were returned
for nonsufficient funds (NSF). If you have an interest-bearing checking account,
add any interest earned to your checkbook balance. If there are no errors in your
checkbook records, the resulting number also should be your “true” cash balance
and match the earlier calculation. All items that affect “balance per the books” must
be recorded in your checkbook register.
An alternative approach to finding the balance of your checking account is to add
to the bank’s record of your checking account balance, shown on the bank statement,
any deposits made; then subtract any checks you have written that the bank has not
yet processed, and that are therefore not on the bank statement. This procedure does
not permit you to discover any errors made by the bank and should, therefore, be
used in conjunction with a bank reconciliation to find the “true” cash balance.

Financial Planning Software
personal financial planning (PFP) Personal financial planning (PFP) software is among the most popular software
software Software that facilitates packages. Many PFP packages are available, offering a wide variety of features and
financial planning with features such as
a computerized checkbook, budget carrying an equally wide variety of price tags. Most, however, cost from less than
forms, and a net worth report $50 to about $200. The most basic packages provide a computerized checkbook,
automatically calculate the checkbook balance, and print checks. More advanced
programs provide for budgeting and preparing a net worth report (personal bal-
ance sheet).
The majority of PFP software packages are written for the IBM PC and PC-
compatible computers, although some are also available for the Apple Macintosh
(Mac) or both the IBM PC and Mac. Information on specific software can be
obtained from local computer software retailers, computer vendors, software mail
order companies, industry publications, and current users of such software.
Prior to purchasing any type of software, you should see a demonstration of the
software on a computer system similar to the one you own. If at all possible, talk to
people who are currently using the software; ask them about any problems they
have encountered.
A typical PFP program is Quicken by Intuit Software of Palo Alto, CA
(www.intuit.com). Quicken provides for checking, budgeting, general accounting,
and single-entry bookkeeping. Support is provided by manual, online, and tele-
phone. Quicken allows for importing and exporting data from and to spreadsheet
software, such as Microsoft Excel, and features a menu-driven system, a help
screen, and customization of accounts.
PFP software should be able to perform calculations quickly and should include
a reference manual with an index. A program’s budget report should show the time
period covered, expense accounts with actual and budgeted amounts, and the dif-
ference between actual and budgeted amounts. PFP software can compute totals for
specific accounts, such as payments to the telephone company. To use PFP software
successfully, you must consistently enter data into the program on a timely basis.
An alternative to using personal financial planning software programs is to design
your own financial planning reports using a spreadsheet program. Among all software,
spreadsheet programs are second only to word processing programs in popularity.
Popular spreadsheet programs include Excel by Microsoft Corporation and
Quattro Pro by Corel Corporation. If you already use a spreadsheet program, then
you can easily type in the worksheets described earlier in the chapter:

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