 QuickBooks Online 2022 Inter-Transaction Purchasing Equipment Using Bank Feeds. Get ready because it's go time with QuickBooks Online 2022. Here we are in our bank feed practice file we set up with a 30-day free trial. Holding down control, scrolling up a bit to get to the 125% currently in the home page otherwise known as the Get Things Done page. And the business view as compared to the accounting view. If you wanted to change to the accounting view it's something you can do by going to the cog up top switch to the accounting view on down below. We will be toggling back and forth between the two views either here or by jumping to the sample company file currently in the accounting view. Back to the bank feed practice file we're going to open up a few tabs to put reports in namely the financial statement reports balance sheet and income statement. Putting our cursor up top right clicking on the tab and duplicating the tab back to the tab to the left right clicking again and duplicating again. As that is thinking I'm going to jump back down to the bottom and see where we're at with the sample company in the accounting view where are the reports on the left hand side that's where they're at that's where they're at. Going back on over to the business view in the bank feed practice file the reports are located under the business overview. Going into the business overview to find those reports and then the reports section closing up the hamburger opening up one of the faves that being the balance sheet one of the favorite reports opening it up we're going to change the range up top from 010121 to 123121 and run it go to the tab to the right and we're going to go into the business overview again reports again and then we're going to look at the profit and loss the income statement often called the P&L you might refer to it as going to do the range change from 010121 to 123121 and run it so this is the only couple transactions we pulled over from the prior presentation and those had to do with probably the most basic type of transaction I'm going to hold control down and scroll up a bit those are the ones where we pay something most likely electronically for expenses expenses that happen on a monthly basis and therefore are easy to memorize recognize record as an expense it gets a little bit more confusing when you're looking at transactions for example that you buy things from one store or one place but you might want to record them in two different areas depending on what you are purchasing on the business side of things so for example if you're purchasing something from an office supply store you might normally put it under supplies but if you have something that you're purchasing over a certain dollar amount you might then say that you want to put that into property plants and equipment some types of fixed asset account so that's what we'll take a look at this time how can you set up a rule to put like a dollar limitation so that if you're over that dollar limitation you might want to at least think about putting the item into a separate account quick overview on what it means to be capitalizing something notice even if you're on a cash basis system meaning and that's basically what we're kind of thinking about here we're thinking about a system at least in the start a system where you're basically depending on the bank we're trying to create our financial statements from the bank feeds which means we're not only on a cash based system we're going a step further than that we're actually creating our books from the banking information entirely as opposed to using the banking information to compare what we did on our side but even in that hyper cash basis system we're still going to need to jump away and do some accrual things there's no such thing as generally being a purely cash basis system because the tax code if nothing else will force us to deviate on things like equipment which makes sense because if you were to purchase something like a large piece of equipment like a car or an office building and you paid $100,000 cash for it it would heavily distort the income statement if you just wrote it off as an expense even if you paid cash for it because for example if I was to compare January to February I purchased $100,000 office building in January which I did not purchase in February I would have $100,000 office expense office building expense in January and that would make January look a lot worse than February even though in February I'm using that office building and therefore the expense from you know if I was trying to judge how well we are doing on a performance basis it's not really fair to write off the whole thing in January that's the whole accrual concept so the idea then would be we'll have to put it on the books as an asset and then we'll allocate the expense to the income statement in a depreciation we'll estimate it and we'll allocate the expense over its useful life that's going to be the general idea and again you can't really get away from that even if you're on a cash basis so the question is well as I do the bank feeds how can I make this as easy as possible so I can kind of catch those types of things that are over a certain dollar amount I need to capitalize so I can treat them differently so I can give that information to my tax preparer so they can put it on their books and run the expense for it possibly giving me then an amortization schedule or depreciation schedule to help me record the depreciation expense okay let's go to the first tab to do this holding control scrolling down a bit we're going to be in the banking overview section and then I'm sorry not in the banking overview we're in the bookkeeping section in this view and then in the transactions and the banking now I'm actually this is where the bank feeds are located I'm going to remove this or change this to the accounting view because I plan on adding some accounts and I don't like the way currently QuickBooks has the adding of the accounts in the business view that's the one thing that I'm not content with or happy with at this point so if you're going to be adding accounts I would recommend as I'm doing here going to the cog switch to the accounting view and then go into the bank feeds so I'm going to switch this up now the bank feeds are now located in the banking tab on the left hand side and then under the banking up top so I'm going to close this up so here's all the stuff that we put into bank feed limbo so we pulled this information in from our institution financial institution and now we need to add them from what I would call here the bank feed limbo that's what I'm calling it here because they're stuck there and they're not being used to help either create you basically double check what we have put in to create the financial statements they need help, they need a little bit of love they need a little bit of information some guidance to pull them into the promised land so we're going to then go down here I'm going to look for one so this is the one we're going to be picking right here I'm just going to imagine this is kind of like an office supply stores or something like that and if it was like an office depot or something like that and we were basically paying them normally we might say anything that I purchased say from an office supply stores I'm just going to expense as supplies expense if they are small supplies and I don't feel I need to track them that would be the easiest thing to do that would be the cash basis thing to do but if I go over a certain dollar amount and that dollar amount is somewhat arbitrary because you know really the capitalization rules aren't really tied to a specific dollar amount but generally if the amount that you're paying for something goes up the likelihood that you're going to have to capitalize it should be capitalizing it is going up so when you're doing the bank feeds a dollar limitation can be quite useful to help you to think ok do I have to do something different with this expenditure that I had here do I need to put it on the books as a capital asset as opposed to expensing it so let's open this thing up and so I'm going to first categorize it I'm going to close this thing out up top I'm going to categorize it here so we've got the date and then I'm going to add a vendor I'm always going to try to add the vendor so I'm going to just copy and paste this vendor right here add it in and so that gives me that added detail make sure that you do that you can record it without doing that but then you lose that added detail I'm just going to add that I'm not going to add any more detail so we'll save it as is and then the account that it needs to go to instead of like supplies expense again I'm imagining this to be like an office supply store instead of going into supplies expense we would be putting it into equipment or some kind of property and equipment so I'm going to say okay let's add another account because I'm creating the accounts as we go adding an account and I'm going to hit the bank drop down or the account type drop down and get rid of the bank and it's going to go into a fixed asset type of account you might also know them as depreciable assets fixed assets property plant and equipment for some reason it goes into accumulated amortization which is kind of confusing and annoying because it should at least be depreciation you would expect but I'm going to go and then here the sub account doesn't matter too much because it really matters what's over here on the description so I'll just pick furniture and equipment furniture and fixture and then I'm going to put it into one that's called equipment equipment so let's imagine we're purchasing equipment I want to make a fixed asset account called equipment now just a quick note on your actual accounts that you're going to be setting up there's a lot of different ways and if you use if you use the QuickBooks default set of accounts they put a whole bunch of fixed asset type of accounts in there but if you use that kind of fixed asset type of account it might not line up exactly to what you're seeing being done on the account side of things when you use the tax software often times you're going to be dependent on your accountant using the sub ledger of the accounting software because they're going to need to calculate the depreciation at least on a tax basis so that means that you might also want them to calculate it on a book basis or if you're a small business you might want to just keep your books on a tax basis because that could be a little bit easier although the tax basis is not the best basis for you know having decision making purposes or your books line up for accuracy in terms of comparison purposes so for example if I jump over here to a depreciation type of schedule this is a type of schedule you might see from a tax software and it'll break out your information in these categories like furniture and equipment and say property planting equipment on down below or here we have machinery and equipment so you might want to line up your account types to line up to what are on the depreciation schedule because that will help you then to do the adjusting entries that you might be dependent on the external reports which are kind of like the ledgers in the tax software to record the depreciation on a periodic type of basis you can also see that the tax software could have the same set of books on a tax basis and on a book basis or you can keep your books on a tax basis possibly if you wanted to simplify or not run two different kind of depreciation schedules so you want to talk to your CPA firm about them talk to them about your tax preparer what does the depreciation schedule look like what are the categories that you use for the categorization of the fixed assets and then I would use these similar kind of categorizations on your side when you're adding new equipment you also want to have the information what did you purchase in detail so that you can give them and be able to have identifiable information so that it will then be included on the depreciation schedule so that if you were to dispose of the equipment in the future you don't have it on the books as some random thing like just it's called equipment and I put the whole 98,000 of equipment in one line item called equipment and then I sold one forklift out of it or something like that well I don't know which forklift I sold so it won't be a problem when you put it on the books like that but it will be a problem when you take it off the books because you won't be able to identify the piece of equipment that you sold on the depreciation schedule so I would look over and make sure your tax preparer is aware of that and doing a good job on the front end recording the depreciation and breaking out those components as we enter it into the accounting system we want to make sure that we are doing so in such a way that we were given that information to the tax preparer so they can put it into the system properly okay I don't need any other sub description it's not going to be a sub account of anything so I'm going to save it and close it so there we have it and so there's the memo is pulling in now the attachment could be useful in this case because you might put the attachment of say the invoice to give you the detailed information possibly numbers if there are numbers involved like an identification number of some kind so that you can get that information to your tax preparer note that these big purchases also are not things that happen on a day to day basis they happen fairly rarely and therefore it's pretty easy to track a few transactions it's not too tedious to get that information because equipment is one of those kind of accounts that you don't have a lot of activity within them okay in any case we're going to set up a rule now set up a rule to help us out with this we're going to say let's say this is going to be the same I'm going to put the vendor here common strategy for the rule and I'm going to say let's set this one let's set that the name and then call it over let's say it's over one thousand one thousand dollar rule because if it's over a thousand dollars that's when I want to check it out and see if I need to capitalize it we'll say here so it's going to be all bank accounts and then the rules that I need to apply are not any but all this time because I'm going to have two separate conditions on down below so in the description I'm going to have the same kind of condition we had in the past which is I want a description it contains instead of it is exactly and then I want to just have that one name in it I don't need all that other garbage in it so that and make sure it picks it up if it has that name which we're assuming or imagining is a supply store of some kind office supplies or something like that so I'm going to add another one another condition this one's going to be an amount now we'll take a look at this a little bit more detail in a future presentation but we'll just get a precursor to it here as we're doing the data input and I'm going to say the amount if it's over if it's greater than if it's greater than 1000 that's when we wanted to put it to this account or do what we're going to say below so the logical test here would be if you're talking about something that contains if there's a transaction that contains this which we're assuming is an office supply store of some kind and is greater than $1000 in amount then apply this rule which will be expense type of form which is like a check form without the check number assign it to an equipment category or account otherwise known and assign it to the vendor of this vendor which we're assuming is an office supply store in this case then we have the memo we're not going to automatically but we're going to basically put it in there once we're going to approve it so I'm going to say save it that's the rule it doesn't like the dollar sign in the rule get rid of the dollar sign it doesn't like those now let's save it now I'm going to sort by category sort by category and I'm going to go find that rule so there it is we've got only one of them here and so it's applying the rule out so that looks good so we can just observe that rule if we want to we can go to the rules on the rules tab over here the rules these are the rules man gotta go by the rules so we've got over here then there's our new rule now anything that's below we might set up another one and we'll do this more concentrate on rules specifically when we concentrate on more complex rules but we might create another rule that if it's over under that dollar amount that it goes to like supplies or something like that we'll deal with that more later right now we're just adding rules kind of as we go this is a bit more complex one that we would have dealing with the equipment so then I'm going to scroll back down I'm going to say let's do it by category or description that looks good what happened to my rule it's in equipment so there it is let's go ahead and add it so I'm going to add that one and see what happens add it and see what happens okay I will add it and see what happens let's do it I'm going to go to the tab to the right and then we're going to say run it let's run it hold down control scroll up a bit it's going to come out of the checking account of course it's got a negative in the checking account because we haven't recorded any deposits or the beginning balance which we'll have to deal with in the future we'll take a look at that later it's an expense type of form which is kind of like a check without the check number going into the form then if we go into the form drilling down to the source document it's not going to take us to the bank feeds but an expense type form which is kind of like a check type form with the payee up top and then the payment and then the category on down below now note that you might ask yourself well what would happen if we had a loan a loan involved here I purchased a big piece of equipment and I had a loan that was involved in it as well so in that case you'd be purchasing the equipment basically for the cost of the equipment and then you'd have another account down here that would be dealing with the loan you'd have to put the loan on the books and the reason I want to mention that now is because the loan is not a cash basis activity so generally when you take out a loan you might be getting cash if you were to take out a loan and get cash but say you financed for example the entire piece of equipment then no cash had taken place even though I purchased had happened and normally like on a cruel basis you would put the equipment on the books and record the fact that you owe money the loan so you'd increase the asset and the other side would be going to the liability so for example if I financed part of this you could record it as you purchased the equipment you could say I'm going to put it on the books for the cost of the equipment here and then this other one would be loan and you'd put a negative amount which would bring the amount that actually decreased the checking account let's say you financed a thousand dollars of it then you'd have a negative thousand dollars going to the loan account which would bring this balance down to 944-48 now that's one way you could do it but note again by doing that you're moving away from a cash basis system because the loan is a non-cash kind of thing you could also if you wanted to try to keep everything on a cash basis type of system and then allow your accountant or CPA firm at the end of the year to shore everything up you might say hey look I'm going to do everything basically on a cash basis system I'm going to provide you the information for you to basically fix it on an accrual basis or do what you need to do for taxes or accrual by then if for example you only paid the 944-48 for example then you might just record it as 944-48 to the equipment account but save the loan documentation and what not attach it to the form and make sure you give that to your accountant and say look we financed this piece of equipment I would like you to put the loan on the books I would like you to adjust the interest on the loan break out the short term and long term portion of the loan if you would if you need to at that point in time and then record the depreciation and all that stuff with regards to the purchase which seems like a lot of work that you're kind of dumping on an accounting firm at the end but they're going to have to dig into this stuff already and in my experience in a lot of purchases and sales type of transactions of equipment what I end up having to do is actually reverse what the bookkeeper did because it's not lining up exactly to the tax code or whatever I need to do and then re-input it so it actually is less work sometimes if you were to have a system where you would just say I'm on a cash basis system and anytime we need to deviate from the cash basis system I will provide you with the information at the end of the year to do so and then just let your accountant basically make those adjustments as long as you know where the line is at that kind of system can work but you got to be able to communicate with your accountant and they have to be able to do some bookkeeping it can't just be at you know someone that just knows tax law possibly but not you know bookkeeping or you know how to do those adjusting entries okay so let's go back I'm going to go back to the report and hold down control and then the other side is going to the equipment here so it's right here in the equipment it's on the balance sheet it didn't go to the income statement and there it is it's an expense type of form going back then to the book so you can see what did not happen it did not hit the income statement so if I go to the income statement on the tab to the right and I was to refresh it freshening it up then we've got nothing down here related to this transaction no equipment expense no supplies expense or anything like that because we capitalized it we put it on the books as an asset now again anytime you add something on the books as a fixed asset then you're going to have to make sure that you provide that most likely to your tax preparer or CPA firm so that they can then do the taxes with it and provide you hopefully with a subsidiary ledger breaking it out by what you actually purchased and give you the depreciation calculation if you wanted to enter the depreciation calculation into into the book so then we would be allocating then the cost of the equipment to the to the income statement or the time period that it was incurred or allocating it over the useful life of the equipment would be the idea by having another account which would be called you know accumulated depreciation equipment so that's the general idea of that