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Here we are in QuickBooks Desktop get great guitars practice file that we set up in prior presentations if you're following along with another practice file that's okay because we're basically just going through the preferences which can be found in the edit drop down preferences down below noting that it's useful to look through a company file that has just been set up such as this one as we go through the preferences so we can note what the default preferences are and when those preferences might need to be changed depending on the type of company that we are working with going into those preferences last time we left off on the payroll so this time we're going to the to the reminders and then we're going to the reports and graphs starting with the reminders we've got the my preferences nothing there the company preferences is where we are at now a lot of these reminders are can be useful in practice but one they can also be a little bit annoying sometimes you might want to turn them off or go through here and decide which reminders are really relevant to you and then to when you're using a practice problem then the reminders often aren't as useful because of the time frame of the practice problem might not be in real time as you're entering data in real time three remember that if you are entering data into the system you might still not be entering the data in real time even if you're working in practice in other words you might be doing a bookkeeping or accounting process in real time entering data as they happen or for example you might be in a situation where you're doing bookkeeping for someone that needs a whole year's worth of bookkeeping done into the system as best we can get it so that we can file the tax return at the end of the year or something like that in which case again the reminders can be a bit of a burdensome problem because a lot of the transactions you're entering aren't being entered you know in real time that said let's go through them here we've got the up top we got show summary show list and don't remind and then we've got the items on the left hand side so check to print so note that if you have a checks that you're going to be printing in quakebooks you still have to like buy the external checks and when you enter the information into the system you can have the checks to be printed and then it could give you reminders you know to print the checks so I'm going to take that off I don't want to be reminded of that you've got the days to be reminded days before a check date so you could enter the checks you know early and then have them remind you on the check dates which could be a good system depending on your circumstances uh checks to print and these are the paychecks so similar kind of things they're still checks in essence but these are special you know processes the process is different it's a paycheck I'm going to once again turn that off invoices credit memos to print so you might be making invoices that are going out to somebody else and credit memos mainly invoices you would expect and once again you might be having them to be printing later and set them up so maybe you print them at the same time and send them out or something like that we're going to be thinking of sending out the invoices as we go those being the document representing that you made a sale on account and are going to receive payment in the future I'm going to turn that off uh overdue invoices so that's one where now the invoices is passed due so that could be a useful one giving you a reminder helping you to track you know and collect but I'm going to turn that off for the practice promise problem almost due invoices so 15 days before the due date and then and so that one's I don't have faded out here so we're going to keep that as is sales receipts to print so now we've got the sales receipts document which is going to be this item the other the other income reporting item on more of a cash based system once again I'm going to turn that off sales orders to print we don't have that here we got the inventory to record reorder so inventory to reorder so if we're tracking the inventory in the system we then can be thinking about you know what if the inventory gets low and we can set up various reminders that basically remind us to be ordering the inventory I'm going to turn that off bills to pay so we've got the bills to pay entering the bills over here and then paying the bills over here and say bills to pay I'm going to say days before the due date so it could be a useful reminder but normally I think you'd be checking the bills if you're working real time but it could be a useful tool I'm going to turn it off because we're not working real time and I don't usually use it in any case memorized transactions do so we can you can get all into these memorized transactions that can make things a little bit easier but and I think we have a section on that that you can we kind of specialize on that but I'm going to turn that off money to deposit going to turn that off so you've got the purchase order so the month notice that we might have money that we received from like receive payments and create sales receipts that then need to go into the deposit area and some kind of reminder could be helpful there possibly purchase orders to print that's on the purchasing side purchase order would only be used if you're buying inventory and you have an inventory system and not only are you buying inventory but you're in a system where you can kind of request the inventory they ship it to you before you actually build the inventory and then you'd be dealing with the purchase orders and you can have a you could deal with that but I'm going to turn it off to two due notes and once again I'm going to turn those off so all those are off and we could take it back to the default if you wanted to so if you go into these preferences and you want to see what the defaults are you can return them to the default if you so choose let's go to the reports and graphs now I'm going to save the changes it says you may changes do you want to save them that's basically what it says I'm paraphrasing and I'm going to say yeah this one we're going to go to the my preferences first so we're in the reports and graphs my preferences so prompt me to modify report options before opening a report so I would typically like it to do that automatically so I think the default of that being off is what most people would generally prefer when a report or graph needs to be refreshed prompt me to refresh prompt me to refresh so it could you know ask you to refresh refresh automatically I think this one would probably be best I would kind of prefer just to just refresh automatically I think the reports themselves generally do refresh automatically even when I'm on that default but I would have it refresh automatically don't refresh click help for information about refreshing a large report and graphs only draw graphs and 2d faster use patterns so we can do the 2d graphs or the 3d graphs when you're when you're looking at the graphs let's go to the company preferences we've got the summary report basis in accrual or cash now this option notice that you might be saying hey look I do a cash based system so maybe I want to report my stuff by cash meaning if I close this out I'm going to say okay I'm going to maximize the home page and if you go into your reports drop down company financial open like a profit and loss for example date and well it doesn't really matter if I and because there's nothing in the report right now but notice that it's on an accrual basis here as opposed to a cash basis you might say well I should have it on a cash basis as my normal basis because I enter data on a cash basis notice that normally unless you talk to an accountant that has a good reason for why you would go to an accrual to a cash basis on the report you still want them reported on a cash basis even if you're entering data on an accrual basis because if I go back to the home page really whether you're on a cash basis or accrual basis will depend on your entering data process and you could be on a cash basis for like the vendor cycle and an accrual basis in essence for the customer cycle or vice versa so in other words if you're down here on the revenue cycle if you just basically have gig work and you wait till something clears the bank like you have a youtube revenue or something like that and then it clears the bank and you record it as a deposit possibly with bank feeds then then you're just using a deposit form you're entering the data into the system on a cash basis in that way even further than a cash basis system because you're not actually doing it you're not entering it with a sales receipt would still be a cash basis but notice the report will still be reporting on a cash basis because you're you're basically entering the data on a cash basis if on the other hand you're in the type of company where you have to do the work enter an invoice track the receivable then you're using an accrual basis and you're going to have to enter an invoice and so that means that this little toggle here isn't really the determining factor as to whether you're on a cash basis or not it's really are you using accrual processes in the system so why do they have this toggle it could be it could be useful to convert you know uh your accrual reports to a cash report meaning if i if i use invoices and bills i'm going to end up with accounts receivable and accounts payable accrual accounts and if i toggle over to a cash basis on the report it's not going to report the income that i normally would record with an invoice until i receive the payment so it'll kind of convert it to an accrual basis so that's kind of an interesting toggle and maybe you have tax implications with it you know because you're reporting stuff on it on a cash basis on an accrual basis but for taxes you're on a cash basis something like that could be an issue with your tax returns and so on but uh normally you would keep it on on an accrual basis and also note that you have the statement of cash flows to help you to see the actual cash flows so you can see it on an accrual basis and then you got the statement of cash flows which is supposed to then give you that added information about the cash flows okay that's enough of that for now we'll go to the edit preferences and then reports so i'm going to keep it accruals the bottom line after all that aging reports so age from due date age from the transaction date typically you're going to put the aging reports from the due date that's going to be the accounts receivable aging and the accounts payable aging because that's when the money is actually owed to you so that's the typical custom we'll keep that reports show items by name only description only name and description when we're looking at items we're thinking inventory items and service items typically and i think you know we'll keep the default typically of having the name and the description in when you enter the item you enter the name of the item and then you have a description field that you can enter as well so in some cases you might have a short name for the item to make it a shorter length sometimes you might have the same name as well as the description the description is what will actually be in the reports on invoices and whatnot when you when you fill out an invoice and then you have an inventory or service item it'll populate the description there on the reports we'll have the name and the description okay so reports show accounts by name description name and description so when we enter an account into the system we usually just enter a name that in that case so in other words if i went to the list and chart of accounts notice we've got the name of the account and then the account type that's the essential information when you enter an account if i was to add a new account i'm not going to actually add it but if we just kind of go through the process we got the account type here let's just choose an expense account and then go next and then you've got the name that's usually what you're going to be showing stuff by but you can also put a description down here the description field isn't required it's usually the case that you're going to be demonstrating it or showing it showing on a report by the name not the description so and then you might have account numbers that we talked about in a prior presentation we won't be dealing with those this time and this practice problem edit drop down preferences again so there is that statement of cash flows classified cash now the statement of cash flows is one of the primary reports you got the balance sheets you got the income statement or profit and loss and then the statement of cash flows and then all other reports are typically going to give you some added information added detail expand upon one or multiple line items of the main two reports the balance sheet and the income statement or profit and loss the statement of cash flows although it's a major financial statement report you can think about it as kind of a subsidiary report in that you're kind of converting from an accrual basis if you're on an accrual basis to kind of a cash basis with the statement of cash flows but it's also taking a step further than that in that it's kind of reconciling the net income on on the on the income statement on an accrual basis to what the net income kind of would be if under a cash basis so therefore you when you're actually creating the reports if you were to do it by hand you would typically make the balance sheet and the income statement as you do financial transactions meaning you enter the forms which enter journal entries into the general ledger it creates the trial balance the trial balance creates the balance sheet and the income statement and then at the end of the period month quarter year you might then make the statement of cash flows based on the balance sheet and the income statement so in other words you're not typically constructing the statement of cash flows as you enter the data into the system you're taking the end result that you have constructed as you enter the data balance sheet income statement or profit and loss to make the statement of cash flows which is going to try to give you that information on a cash flow basis but because of that it's it's it's can be a little bit confusing to actually construct the statement of cash flows and it's going to take the difference in the balance sheet accounts basically and if you go into here it can help you to kind of see where the classifications are for the three components of the statement of cash flows operating investing in financing you can see it basically takes the change in the balance sheet accounts down to here because these are income statement accounts and then and that's how it kind of constructs the statement of cash flows it's not a perfect system this way but it does give you something that will pretty much always tie out to basically the balance sheet cash account and so if you want to learn more about the statement of cash flows and how to construct it it really helps you understand the double entry accounting if you can actually make a statement of cash flows then it really helps you understand the double entry accounting system we have a whole course on that in more detail but that can help you to classify the accounts default formatting for reports so we'll keep that there collapse transactions select this checkbox to combine collapse multiple items in a transaction into a single line so when you're entering data this will make it the data as slim as possible to enter the information into the system although you'll lose some of the added fields that might be there if you if you didn't have that collapsed i typically keep it uncollapsed you can do some of your data input if you so choose and test out whether or not it'd be faster for you to kind of collapse here but i'm going to keep the defaults as they are on this one so let's close that out we're going to continue on with our preferences and future preference presentations