 QuickBooks Online 2024 creating sub-accounts and categories for fixed assets otherwise known as property, plant, and equipment, P, P, and E. Get ready and some coffee because we're going to get the books on key with QuickBooks Online 2024. Here we are in our get great guitars 2024 QuickBooks Online sample company finally set up in a prior presentation opening up the major financial statement reports like we do every time the reports they're on the left we're in the favorites we're right-clicking on that balance sheet to open link in a new tab right-clicking on the P&L the profit and loss to open the link in a new tab repeating the process for the trustee trial balance then we'll tab to the right close up the hamburger change the range working in the first two months of jen of 2024 that's from 010124 tab 022824 we'd like to see the first two months side by side so we'll select the months run the report tabbing to the right closing the hamburger the ranges they are changing we're going from 010124 tab 022824 tab once again selecting months so we can see the side by side tab into the right repeating the process hamburger closed and the times they are a change in 010124 tab 022824 tab are they changing for the better no i don't think so but we can always hope let's hit the months here we're going to run that report and then we're going to tab back to the balance sheet over here discuss the new process that we're looking at we're looking at the property plant and equipment down here otherwise known as the pp and e called the fixed assets for the account category in quickbooks might sometimes be called depreciable assets as we discussed before the fixed assets is an accrual type of account meaning even if you're on a cash based system you can't really get away from doing the accrual component when you're looking at something that is as extreme as property plant and equipment the classic example being like a building because when you buy a building even if you paid cash for it you tend to think well i'm not just going to expense the building we're not just going to have building expense for a hundred thousand dollars even if we paid cash for it because we instinctively know that if i tried to compare this year to next year with when i expense the entire building it wouldn't be a good comparison of actual performance of the business that's why we have the accrual kind of process so we would say okay we're going to put the build the building as an asset even though i paid for it like i paid for supplies and the supplies i would put on the books as supplies expense and why is that because the building is going to is going to be an investment it's going to be benefiting not just one period but multiple periods into the future and even if we wanted to expense it just for ease because it is the easier thing to do we can't really because the tax code at least in the united states forces us to put it on the books uh as an asset we also want to track it in a similar way as we do with the inventory inventory is typically something that can more easily be stolen we're more worried about people stealing our guitars and whatnot than our sofas or the actual building that the guitars are in however we still want a list of those assets because people they're getting quite bold these days right they might just go into our our warehouse and drive out the forklift or something and just drive it down the freeway for all you know wouldn't be surprised these days you know so so we want to be able to track our fixed assets as well and have a list of what those fixed assets are in a similar way as we want to have with our inventory because those are their assets right they're things that we're holding on to that are going to help us to generate revenue in the future now you would think then that there would be a sub ledger within quickbooks to do that but generally that might not always be the case because the calculation of depreciation is quite complex so it seems not very efficient to try to have two sub ledgers one in quickbooks and one in the tax return and because the tax software is mandatory to have depreciation calculated in the united states on a tax basis oftentimes many small to mid-sized businesses will just simply use the tax software to calculate the tax depreciation and either use that tax depreciation as their books depreciation as well even though it's not ideal to do so from a bookkeeping standpoint because but it's the easy thing to do because then you don't need two depreciation schedules one for tax one for books or you can use the tax software to also calculate the book depreciation as well as the tax depreciation whatever method you use in that however then you have a question of well how am I going to group my accounts in my quickbooks software and I would suggest you probably want to group it in the same format as the categories in the tax software because that's where your sub ledger will be supporting the actual things that you have on the books and the related accumulated depreciation so you might work with your accountant or tax preparer and say well what are the major categories that you have in the tax software and typically it's like furniture and fixture machinery and equipment and so on these categories being geared to the useful lives typically provided by tax law that's what the grouping is usually kind of designed around and so we're going to say let's group our stuff in the same format so that when I get the sub ledger I can look at the grouping of furniture and fixtures and the grouping of machinery and equipment there would be automobiles building typically and have those same categories tie into my totals here for furniture and equipment and so and furniture and fixture and then the equipment and so on and so forth so that's what I'm going to do now I'm going to imagine look we have everything in this one thing for furniture and equipment but my sub ledger in the tax software breaks out furniture and fixture versus equipment in a separate category it would be easier for me to tie out my books to the sub ledger if I mirror the sub ledger in our in our side so what we want so I'm going to do that now I'm going to say that the last purchase that we made was for five thousand dollars which was actually for machinery and equipment whereas the rest of it is actually furniture and I would like to break those two things out into their own categories all right so let's do that I'm going to go to the first tab think about how we might do that we'll go into our transactions and then I'm in the chart of accounts on the right hand side let's close up the hamburger and then I'll scroll down we're looking for the fixed asset type of accounts now QuickBooks gave gave us we already deleted I think some of them they gave us a whole lot of fixed asset accounts and sub accounts and whatnot and they have their rationale for doing that I think to try to give us an idea of what might fall into fixed assets but that's probably not the best way to actually group your fixed assets because again you want to group it in the same way as the sub ledger will be so you want to work with the tax software if that's going to be your sub ledger and so just be aware of that you might have to clean up the the accounts whereas if I for example if I go down to the to the expenses QuickBooks also gave us a massive list of expenses but