 Zero accounting software 2023 quote or estimate and advanced customer payment or unearned revenue. Get ready to be an accountant hero with zero 2023. First, a word from our sponsor. Well, actually these are just items that we picked from the YouTube shopping affiliate program, but that's actually good for you because these aren't things that we're just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased and use ourselves. Here we have a Western digital WD elements, 20 terabyte USB 3.0 desktop external hard drive. We use as part of our backup system, noting that if you lower the number of terabytes of storage, the price will lower dramatically as well. When you're thinking about a backup system, you're usually thinking about an online system or an external hard drive system like this or ideally some combination between the two giving you some redundancy. You can also work directly from an external hard drive like this, but there are some drawbacks to doing that. One being, if you use this as your primary drive you're working from, it's no longer a backup drive and you're gonna need a backup system, possibly another external hard drive and or some kind of cloud backup system. And if you're working on something that takes up a lot of short term memory, a lot of RAM as you're working on it, such as video editing, the external hard drive can slow up the system. So you might wanna come up with some kind of system where you download the project you're working on to your computer, to your C drive or possibly to a solid state drive which is a much more expensive external hard drive as you do the work, once the work is done then save the project to an external hard drive such as this. 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We're gonna go back to the tab to the middle go to the business drop-down I'm sorry accounting drop-down so we can open up the balance sheet financial statement report and then go to the tab to the right and the accounting drop-down this time the comparative income statement if you don't have a comparative income statement you could just open up the normal income statement we constructed this one in the past to compare the first month and second month January and February February being the current month we're working on at this time on the balance sheet tab we're gonna select the drop-down and custom date range it to 2023 the end of 2023 and update that report as well. So last time we did a prepayment type of situation we're gonna do that again simply starting with the estimate this time as we go through the practice problem so let's do a pre-payment type of situation practice problem so let's do a quick look at the flow chart again this is the QuickBooks desktop homepage snapshot flow chart which we're just using to see the flow of accounting forms as we go through the process remembering we're down here on the revenue cycle where at the end of the day we expect our check-in account to go up for goods and services that we provided however the number of steps we need to take will be dependent upon the industry we are in the easiest industry being like a YouTube creator or something where we're just gonna get money deposited into the bank account and we might record revenue at that time we could also have a cash-based system where we're at a cash register in which case we're gonna be collecting cash at the same point of time but we're gonna have to record it possibly into a clearing account so that we can then deposit it in the same format as we'll be showing on the bank statement so we can do a bank reconciliation we might have a situation where we have to do the work first and invoice the client tracking then accounts receivable receiving the payment making the deposits but sometimes we might have a situation where we get the money first and we're going backwards we got the money before we earned the money industries where that's common are subscription-based industries which are classically newspapers, magazines but now applications, computer applications and anytime we wanna deposit customer deposit situation which is our general scenario here where we are selling a large piece of inventory we don't have it on hand someone wants us to order it or something like that therefore we ask for the customer deposit to lock them into the sale that means we're getting paid before we do the work so we should record the money as deposit to the checking account the other side go into not revenue yet but instead a liability account because we owe the money back in essence or we owe them the work in our case the delivery of the guitar now notice that when you're looking at other software than zero sometimes there's an issue with the pre-payment because if I go back on over here on the bank the accounts receivable is the account that usually tracks customer information so if we create a liability account like unearned revenue a lot of software doesn't have that same link to then pull in and track that unearned revenue by customer to later put that credit balance into the invoice whereas zero does have that capacity so if you're following along with other comparative courses like an Excel or a QuickBooks then we might take some other steps in order to be able to break out the unearned revenue or to track the customer pre-payments but in zero they have a nice system so we're just going to keep with that system that is being used here so we're going to do the same kind of thing we did last time I'll go to the first tab we're going to make it a quote imagining someone comes in wanting a a guitar and we're going to say ok we'll give you an estimate of how much it'll cost I'm going to start that with a quote so we'll make a quote here and I'm just going to say it's going to be for string music so I'll say it's for string music which we set up in a prior presentation let's say this happened on Feb 27 Feb 27 Feb 27 that sounds cool alright and then down here what do they want we're going to say that they want an ELP so let's just say ELP and we're going to imagine that we have to find that ELP that specific color or something or possibly have to order that particular guitar actually let's change it let's say that they want a different one it's an EPSP an Epiphone Standard Pro let's say they want that one ok so they want that one we're going to say that's the estimate if we include the tax it's being included automatically just like it would on an invoice so we can give them the number that it would cost plus the tax and then if they want us to hold on to that guitar as they're going to come into the shop or something like that we're going to say that's great but you want to lock it down you want to lock it down because we've had people come look at that I just like five seconds ago someone looked at that guitar I almost sold it like that you're lucky it's still here it's a down payment so then we might request a down payment at this point in time based on this amount possibly having a standard policy like a 10% or something like that if that was the case then we might say ok I'm going to save this form and then let's mark it as sent let's mark it here as sent if we were going to email it or send it we could send it but I'm just going to say mark it as sent so now if I go into my business drop down and we take a look at our quotes we can track this quote as it happens thus far so here it is it's in the sent area and then in the sent area if it's accepted I could say they're going to accept it so let's say it's accepted and now it's been pulled into the accepted area and it has not yet been used to generate an actual invoice with now before we make the invoice with it we want to collect the down payment now if you were comparing this to another software that we're doing comparative practices to we might set up an item to help us track the customer deposit but we don't need to do that in zero so we could just do a nice simple receive money form here and we're going to say I'm just going to take it it could go through the clearing account let's take it through the clearing account this time just to practice going through the clearing account in case we had multiple collecting of money so we'll take it to the clearing account this time that'll match out with other practice problems better than I did before and continue and so then we're going to say this is going to be for string music was it that we set up yeah string music I think and the point is I'm not going to make a direct payment but make it a prepayment that's what gives me that nice connection and then I'm going to say this happened on February Feb 27 Feb 27 and we're going to call this a deposit customer deposit that is and we're going to just say it was $100 we're just making a generic $100 and the other side is not going to revenue we expect to apply to revenue later when we sell the guitar but we haven't sold the guitar and therefore it's going to go into unearned revenue which we set up last time and if you haven't set that up before it's going to be a liability account so it's a liability account because we're getting money but we haven't done any work therefore we either owe the money back in the future or we owe the work in our case the work being the giving of the guitar which we will then do when we make the invoice so what's this going to do it's going to be increasing in this time the clearing account for the $100 the other side is going to be then going to what we assigned here the liability unearned revenue and Zero has that nice features that still is able to link out so that we can still track the fact that we have the sub ledger kind of tracking for the customer of string music so we can pull it into the invoice very nicely from an internal bookkeeping perspective so let's save it and close it and check it out and save it we have the green indicating we're go green go everybody knows that green is go so then I'm going to go down and say now we've got the clearing account $100 right there we haven't yet deposited it into the checking account and then the other side is going into our unearned revenue once again unearned revenue just like there it is unearned revenue and let's go back on over let's go back on over and so now if I go back on over to the first tab I can also track this information so if I go to the accounting drop down and we saw that we had our quotes there let's do the business drop down let's go into our invoices so on the invoice side of things we now have this one for string music showing up as a customer credit which we can then apply out to a future invoice so that's great because it's actually tracking something that's not in the receivable it's in the unearned revenue that's what makes it different than other software that doesn't really often have that capability we can see it in the awaiting payment over here and then we can see it in the contacts in the all contacts and we go on down to string music string music which is down here doneday there it is okay so there we have it so there's our quote and there is our prepayment so now let's go to the quotes from here so let's say they come into the stores let's go our business drop down and let's look at our quotes and they're saying hey I made a quote and you can imagine them even talking to someone else and they're like hey I made a quote in a down payment and we're like okay I see the down payment and here's my quotes let's see if we can pull up the quote for you Mr. String Music and it's been accepted I can see that here so yes let's go ahead and make an invoice from this quote for you right here and now let's go ahead and create the invoice it's going to mark it as invoiced once done moving it from you know this category to that category in our quote area it'll then create our invoice string music populated we're going to pull it back to Feb 27 Feb 27 for the date and let's make the due date May 27 May 27 let's say and okay and then it pulled in the amount perfectly just like we would expect it to do what is not being applied out yet is the $100 prepayment that we had here now again if you're following along with like a QuickBooks comparison course then there we made a we have two different methods we used another method to make an item so that we can record it as unearned revenue but we don't really need to do that here because we have this nice connection so there we have it so what we're going to do is if I approve it's then going to give me the pop-up hopefully that's going to say hey we have this outstanding amount that you can apply to it so I'm going to say okay we're not done yet that's not the end of the transaction we're going to hit the approval and it says we're going to use it as $100 in outstanding credit meaning a prepayment that we can apply out to this amount so we're going to say would you like to allocate the credit here we're going to say yes we would and then it even gives us a thing to allocate some of it or all of it which is nice option as well and I'm going to say we're going to allocate all of it out there bringing the balance from 630 down by 100 to 530 and then if we look at our invoice this is what it looks like so now it's even more confusing of a transaction so this is the invoice that we can actually provide to the client to then collect on the remaining balance of the 530 and it gets confusing to kind of track this because invoices are confusing already with inventory but now we have this added thing so what happens well accounts receivable is going to go up and this is where it gets tricky it's going to go up by the 630 but it's also going to go down by the 100 because this 100 is going to be decreasing the amount that 0 nicely put into unearned revenue and it's now going to be put into accounts receivable so accounts receivable is going to go up by the 630 and then down by the 100 credit and the unearned revenue is going to go back down by that 100 the other side is going to go to revenue for the 600 rather than the 630 the difference of the sales tax which is 5% the 6 and the 24 is going to be a payable account just like normal and then we're also going to have inventory go down by an amount not up here but driven by the item and cost of goods sold is going to go up the expense accounts by an amount driven by this item the net impact on net income will be the revenue here just like normal the 600 not the 530 the 600 revenue minus the cost of goods sold and the accounts receivable sub ledger will reflect what is still owed meaning it's going to be applying the amount which is going to be basically the 530 that's still basically owed because it's going to go up by the 630 minus the 100 for that particular client and the inventory will have a sub ledger decreasing in units as well as dollar amounts for the epiphone standard pro really neat really cool let's check it out we're going to go to the balance sheet and we'll say okay accounts receivable A to the R here's where the heart of the matter is the heart of the matter is in here this is like the chest of the situation because that's where the heart of the stuff is in the chest so we're going to say here it is receivable invoice the 630 went up by the full amount and it also pulled in this 100 which is coming in from the other side of the unearned revenue for the net being the amount that is the net increase to the receivable neat neat oh neat oh and then if I go to the tab to the right and update over here we've got the sales which should be recorded as normal not including the decrease of the prepayment so it's being recorded by the full amount of the 600 not including the sales tax and not decreased by the credit and then we're also going back to the balance sheet the sales tax liability if we go into that one that one then we have this one being impacted by the sales tax liability as normal not really impacted it being calculated based on the sales price as normal not changing because of the credit and we have the inventory going down so the inventory decrease shouldn't be impacted by the credit it's going to be going down by the amount that we put in for the item in a perpetual inventory system as normal not the sales price but rather the cost and then the cost of goods sold the expense related to us selling the inventory has increased for that same amount that we decreased the inventory for so there we have that and the impact on net income is the sales price not the amount the net impact on receivable after the credit but the full sales price not including sales tax minus the cost of goods sold and then if we go back to the balance sheet the sub ledger for accounts receivable should be tying out still so I'm going to go to the tab to the right right click on it duplicate the tab let's take a look at the sub ledger breaking out accounts receivable by customer so we'll go into that one and go into our accounting reports looking for the sub ledge of accounts receivable down here in payables and receivables accounts receivable summary let's take a peek at that and we're going to say ok that's good so here it is breaking out by customer here's the total by customer and we just did string music here so which is showing now the 530 do at this point so there's the total of 2140650 tying out to the balance sheet 2140650 also sub ledge for inventory that should tie out to this number tab into the right right clicking duplicate let's take a look at it 2 so we'll see that don't leave out the inventory they want some attention drop down reports and type in inventory item list inventory item lists and so that should be good we're going to scroll down here it is by unit and here it is by dollar amount and there's the 5344 that should tie out to what's on the balance sheet at the 5344 movie B to the end BN that's good tab into the left and then we can also see if I hit the drop down that if I go into the quotes for example the quote has now been moved over to invoice so it has been invoiced here nothing's in the accepted if I hit the drop down on the business and go into the invoices then we can look at these are all the invoices the awaiting payments we have string music awaiting payments but it has partially you know been paid which we can kind of see the yellow dot here the amount due here and if we go into the contacts and we look at all contacts and just look at string music scrolling down to string music and we're going to say there we have our information here as well invoice partially paid here's our partially paid invoice you can see the amount due for everything for this customer up top if I go into that particular invoice then we see the detail the 630-100 is the 530 so pretty pretty nice pretty and nice pretty nice let's go to the tab to the right and open up our trial balance go into the accounting drop down reports and then trial balance here to see to see it just appear like magic when we type stuff in typing is magic we'll hit the drop down we're going to go to the custom date range bring it up to 2023 end of it run it if your numbers tie out to these numbers great if not then it might be a date range issue if you were on last time but your numbers are off this time the things that have changed were so we have a change to this payments the cash clearing account and we had a change to the accounts receivable well I think it went up and then it went back down again but there's activity and the accounts receivable and then we had a change to the inventory because we had an invoice that we were dealing with there was activity that happened in the unearned revenue although it went up and then back down I believe to where it was before there was activity in the sales tax payable account because we sold inventory with the invoice there was activity and the sales line item because we had an invoice there was activity and the cost to goods sold so if anything's off you think it might be one of those items you could change the date range to see if it's a date range issue you can drill down to the source document you can make a change if you need to make a change possibly to the date that way