 QuickBooks Online 2024, month one reports. Get ready and some coffee because the accounting team is on board with QuickBooks Online 2024. First a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways. Like this CPA thinking cap for example CPA thinking CAP you see what we did with like with the letters and this CPA thinking cap is not just for CPAs either anyone can and should have at least one possibly multiple CPA thinking caps. Why? Because based on our scientific survey of five people all of whom directly profit from the sale of these CPA thinking caps wearing this CPA thinking cap without a doubt according to the survey increases accounting productivity tenfold yeah at least yeah apparently the hat actually channels like accounting energy from the quantum field ether directly into your head allowing you to navigate spreadsheets faster it's kind of like how in like the matrix when neo learns kung fu or at least that's what the scientific survey saying so get one because the scientific survey participants could really use some extra cash if you would like a commercial free experience consider subscribing to our website at accounting instruction dot com or accounting instruction dot think of it dot com here we are in our get great guitars 2024 quickbooks online sample company file we set up in a prior presentation opening 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 the balance sheet to open a link in a new tab right clicking the profit and loss otherwise known as the income statement to open a link in a new tab and the same for the trial balance if you don't have that trial balance in the favorites you can search for it in the search field tapping to the right closing up the hamburger changing the range going from 010124 tab 013124 tab let's run it so we can refresh it tabbing to the right closing up the hamburger repeating the process of the range change 010124 tab 013124 tab refreshing it again tabbing to the right closing up the hamburger and those rangeings they are a changing another time 010124 tab 013124 tab and we will run to refresh again let's go back to the balance sheet this time we've entered basically one month of data input we want to analyze the financial statements quick recap of what has been done thus far for the first month of operations we set up our new company file with quickbooks we then took a look at those foundational items necessary to be able to start running our accounting process to do actual financial transactions with the forms those setup items found in the cog under say the your company area where we have the settings we have the managing of the users and we set up the payroll and then the lists including the chart of accounts products and services we also brought in our customers our vendors and our employees we then imagined that we did have a prior accounting system that we started working on that we pulled the beginning balances into our current system as of the end of the prior period so we put all of our beginning balances in place as of December 31st 2023 so that we only had balance sheet accounts for the current period we're starting to work in which will be starting January 1st 2024 and then we entered one month of data input for the current month the first few transactions being those that were similar to a new business that that comes into play so if I if I collapse all these we'll recall that we have the assets first thing we typically need to do is gather some cash so we need some cash so that we can have cash to then purchase the things that are going to help us generate revenue which are the fixed assets and the inventory the inventory is in here inventory so that means how do we do that when we start well we can't get the money from the customers because they would have to pre-order something that we don't have to sell them yet so typically you take out a loan or you put it in yourself with equity so we started off with those types of transactions which are not those here's the loan and here's the owner investment those are not the transactions that we expect to happen on a monthly basis those are the startup transactions and then we bought the inventory we bought the the furniture to have our nice beautiful guitar shop that attracted customers in so that we can then sell them guitars and then we started doing one month of data input recording the sales of the guitars and the related costs to those sales finally having some impact on the income statement where we had the the income and the related expenses for it so this time let's go back through now that we have have done a month worth of data input we want to analyze the results on the financial statements how how have the financial statements been constructed and let's deconstruct it a little bit now and and go in the reversed order right so we've gone through we've constructed the financial statements using basically the forms by cycle here and now we have the end result after one month of data input let's do a little bit of deconstructing now drilling down from the end result back to the source documents remembering that the balance sheet in the income statement are our major financial statements all other reports are basically sub ledgers for the most part for one or multiple line items giving us more detail about one or multiple line items on the balance sheet or the income statement to do this let's go back to the first tab as well and i'm going to open up my chart of accounts so we're going to go into our sales tab and let's go not the sales tab transactions chart of accounts on the right close up the hamburger and there's our chart of accounts you'll recall that the chart of accounts has been provided by quickbooks we basically used quickbooks chart of accounts which is way too large and we tried to see if we can fit what we do within it after two months of data input we might then go into the chart of accounts and remove some of the excess accounts so we don't have uh too many accounts in there which could make things a little bit slower so let's go back to the balance sheet and analyze this piece by piece so i'm going to then say let's close this whole thing up we've got our assets liabilities and equities that's the accounting equation and that's a representation of our double entry accounting system the other way we could represent the double entry accounting system being with debits credits debits equaling the credits that's what the trial balance looks like which we'll take a look at shortly now we can also think about this accounting equation just using some algebra as assets minus liabilities equals equity so 227.695.77 minus the liabilities 77.372.33 gives us the equity of the 150.323.44 that's the book value of the company so looking at it from a finance standpoints or from the standpoint of the owner equity you might just look at it that way because equity is kind of like the book value of the company although you don't actually have 150,323 dollars even though we measure it in dollars because the assets are not going to be in cash if we were just wanted to hold on to cash we wouldn't have started our business why did we start the business to earn revenue and cash doesn't help us earn revenue sitting in the bank it helps us earn revenue in an investment so we invested the cash in the inventory and the fixed assets property plant and equipment so therefore although the book value of the business is this 150,373 or 323 we would actually have to liquidate the business most times to actually access that cash meaning we'd have to sell the assets get the 227.695 in cash although we wouldn't get exactly that amount because we don't know exactly how much we would get if we sold the business but that's what we currently have on the books right that's kind of an estimate and then we'd have to pay off the bank and the loans and then we can get the money so that's in theory what we would get if in essence we liquidated the business is the general idea so if I start to open up the assets what do we have under the assets we've got the current assets we've got the fixed assets and we've got the other assets recall that the current assets is a financial accounting category that basically means they're more liquid assets assets that we're going to use basically in the next year for example if I open it up that means they're closer to basically the checking account basically closer to cash then instead of having cash in cash equivalents which would be a normal external reporting type we have the checking accounts or the cash accounts why because from an internal bookkeeping perspective the checking accounts are the ones that you can connect to the bank feeds they have a different functionality therefore we have this extra drop down not needed for normal external reporting purposes but necessary because we have a different account type that we have set up that's more specific than than a checking account then a current asset account that also adds a longer statement because now we have these subtotals with the drop down so then we've got the accounts receivable similar type but by the way if I go into the checking account you'll see that we have more activity in the checking account than any other account so oftentimes when people analyze the accounts the first thing they drill down on is the checking account and they become intimidated because we have a lot of activity in there and we have a lot of transaction types it doesn't look like from first glance there's any rhyme or reason as to what's going on in here everything's running through it that's because the checking account is the life blood of the organization and therefore it's involved in every cycle no other account is that way so analyzing any other account is a lot easier to see what's going to happen in the account because it's not involved it's not integrated in all of the cycles also remember that this is a transaction report which is kind of like a general ledger report meaning it's given us the activity by date so transaction by date report basically a gl general ledger report so then you can also filter it up top and the most common filtering types are the transaction types when you're in these transaction reports you can add a filter and the most common is transaction type generally equal to and then you can pick the types of transactions that you want to be filtering by thusly all right let's close that back out let's go back on exit this one then the accounts receivable is kind of the the accounts receivable is another current asset account which also has its own drop down which seems somewhat tedious why does quickbooks do that we don't really need that if there's only one accounts receivable account which there often is because the accounts receivable has its own account again and the general ledger because accounts receivable has its own specific needs because it has a sub ledger which tracks out the customer activity backing up and supporting the accounts receivable account therefore we have a whole another series of accounts that support the accounts receivable if i go to the tab to the right right click on it duplicate that tab and let's take a look at some of those reports we're going to go down to the reports on the left close up the hand boogie and if we go down to the who owes you basically most of these reports are some type of sub ledger that are giving you more information on the accounts receivable just the most classic kind of report that's just a normal sub ledger is the customer balance summary which gives you the information by customer so these are the outstanding balances the total then tying out to the 146 87 which is on the balance sheet 146 87 we also will manage that internally in the customer center if you didn't have any invoices because you're not making invoice sales you're selling on a cash based system you won't have accounts receivable accounts receivable is and a cruel account and i just want to point out that if you if you thinking that you want to be on a cashed or a cruel based system you usually can't have it you don't have like a choice you're basically going to say what is the industry standard if i have to invoice people that i'm going to be on an accrual system if i don't have to invoice people i'm basically using a cashed system now you could still call it a cash system even though you could still call it an accrual system even if you didn't use accounts receivable technically why because if you just use the sales receipt and you just got paid at the same point in time both the cash and accrual system would record the same transaction at the same point in time but for different reasons the accrual system would record it because that's when you earned the revenue and the cash system would record it because that's when you got the cash it's only when you have an invoice where you earn the revenue and the cash is going to be coming at a different point in time that it's important to define which method that you're using because they're going to end up recording revenue at two different points so in other words if i switch this to a cash based system up here which you don't typically want to do for normal reporting we no longer see the accounts receivable it's removed it because now it's it's not going to record anything until we actually receive the money so i just want to point that out because people often get confused between that cash and accrual basis often thinking i want to be on the easier method if i can on a cash based method but really it's driven by what industry you're in if you have to track accounts receivable you're going to have to track accounts receivable if that's the industry you're in okay so if i go into the accounts receivable you can see the transaction detail report now it's a lot easier to manage because it should simply be going up with invoices and then down with the payments that we have received on them we invoice people for work done they owe us money they pay us for the work that has been done the accounts receivable goes back down and we get money which is a checking account all right next account we've got the other current assets now this whole group are the current assets that don't have a special need and therefore needed their own account category like the checking account and the receivables the first one being inventory which you would think why doesn't that have a special category if we're tracking inventory on a perpetual inventory method because it's going to need a sub ledger however quickbooks is not forcing us as they are with the accounts receivable to tie out to the sub ledger so it's not it's not blocking us in some way so it doesn't have its own category even though it basically has a sub ledger but let's take a look at the sub ledger if i tab over here and we go to the reports on the left i'll just type in inventory valuation summary and you'll recall that this is the inventory that we have and the quantity and this is the value so that 15678 should tie out to what's on the balance sheet of the inventory here it does not let's try it again i think i need a date change 0101013123 okay i can't do it 0131224 i forgot what is happening i've been lost i okay so we got 9698 let's go back on over here 9698 so we will only have that sub ledger if we're tracking inventory on a perpetual inventory system within quickbooks there are other inventory methods you can use you can use a periodic inventory method but we used a perpetual inventory method here we have the stocks now you wouldn't expect by the way if i go into inventory the inventory is going to be going up if you have a perpetual inventory system when we purchase the inventory and we purchase inventory with money going out which would be a check form or an expense form uh or possibly a bill form and then inventory is going to go down when we sell the inventory either with an invoice or a sales receipt the two sales receipt form so that's what we would expect to see in the inventory account the investment account is just a short-term investment that we wouldn't typically be dealing with all the time in most businesses because we're not in the business of investing but we might have a short-term holding account in which case you wouldn't expect a whole lot of activity in this account possibly having month-end adjustments to adjust for the increases and decreases in the fair market value of stocks and bonds if they're traded on a market and then we've got the payments to deposit that account is zero that is a clearing account if we don't want that account to show up for external reporting we could then select up top and say that we want uh on non-zero accounts having it show up is great for internal reporting if i go into it you can see that this account should be going up when we make when we receive money from customers with the sales uh receipt and uh basically with the with the payment form so a sales receipt and payment form uh the payment form is the payment form after we have an invoice we get paid and then we put it into this clearing account possibly same with the sales receipt sales at a cash register so that we can then group them together to put them into the bank account in the same format as we'll be showing on the bank side reflected with the bank transactions so we can do our bank reconciliations so that should be zero oftentimes if it's not zero then people are having a problem dealing with that account right this used to be called undeposited funds so then we've got the total current assets and then we've got the fixed assets fixed assets property plants and equipment buildings uh equipment cars automobiles and what not and uh furniture are typically going to go into here notice if i go into this account we're not going to have a whole lot of detailed transactions within it even less than like an accounts receivable far less than a cash account because we don't buy furniture all the time we bought beautiful furniture when we started up the shop we expect that furniture to last for some time unless we have some rowdy you know mean mean people that are that are gonna you know they mess up the furniture just for the fun of it they put they like put magic marker on it because they think it's cool or put gum in my under the seat cushion or something like that but we don't deal with those kind of clients we steer clear from that kind of hood lemon edges is hood lim edges and so then so that means our furniture is going to last for a long time we shouldn't see a lot of detail in here because because of that and we only record to this when you have large purchases then the question is should i put it on the books as an asset or can i just expense it also note that this is an accrual account so is the inventory by the way this is an accrual account and uh you can't really get away from this accrual account even if you want to if you're in the united states for example because the tax code is going to force you to do some type of of accrual component to fixed assets and intuitively people know that because if you buy a building people don't building expense doesn't readily come to mind even if you paid cash for it right you're going to put it on the books as an asset because you because you intuitively know that it doesn't make any sense to just write off the entire building that you use for business because it's an investment you're going to use it over a long period of time and therefore it makes more sense to write off the cost of it over the period of time that you're going to use it because then the income statement will be able to match you'll be able to to compare one period to the other so even if we even if when we don't understand the accrual method at all we still kind of use it sometimes but uh but it's nice to kind of have it a little bit more concrete so you're going to have to do it that then we're going to depreciate it which is just going to going to allocate the cost we're only going to have a transaction in the accumulated depreciation possibly monthly or yearly and we might get that information from our tax preparer and the tax software which we will talk about more in a future presentation or section or course on the adjusting entries we've got the prepaid insurance so this is going to be I probably should have put this in the current assets I put it into other assets here I should I should put it let me change that right now that's not right let's go to prepaid assets here and go to prepaid I put it into other assets I want to put it into current assets let's go ahead and see if I can edit that one I did this on purpose by the way just to show you that you can change it if a mistake has been made then we just correct the mistake we don't get upset or anything it's going to be okay other current asset I'll just put it there I'm sure someone will comment on that before before but then I'm going to put it into then I'm just going to say other current asset let's do that and then if I go back to the balance sheet and run it again then we're going to say there's the prepaid insurance in the $12,000 so that represents similar concept as the furniture and fixture actually in that we paid for the insurance before we used it so therefore we put it on the books as an asset now it's not as extreme an example and you might not have to deal with it as much with the tax code in the United States if you basically expense it when you purchase it for example so you want to you want to think about whether or not you need to do that or not there's different methods you can use to deal with the prepaid insurance you might just expense it when you purchase it and then tell your accountant about it at the end of the year so that they can do an adjusting entry but the normal way to deal with it is you put it on the books as an asset and then you expense it as you consume the insurance meaning as the policy expires and so that's how we have it here so then we have the total assets so the 227 695 77 notice it says dollars but remember it's not all dollars most of it will not be dollars so it's not like I can just pay someone it's not like if I wanted to close up shop I'm just going to have 227 dollars no I'd have to go through the pain of liquidating all of the equipment and whatnot to try to see if I can get that much money from it so we don't want to have to open and close the businesses kind of willy-nilly or at will kind of thing it's not something that you can just turn on and turn off we're taking on a risk by buying the assets right the furniture and equipment and whatnot alright liability side of things we've got the current liabilities that's a normal a normal financial statement account but then we have the same thing we had with the accounts receivable with the accounts payable has a separate account why because we need to be tracking this by by vendor this is another account that will only be there if you have an accrual system for it if you're entering bills which is less likely oftentimes for small business because small businesses might just pay the bills as they become due either with a credit card or with the checking account so larger businesses are more likely to really get into tracking the accounts payable due to the number of transactions the size of transactions which makes it a lot more advantageous there's a benefit to trying to delay payment as much as possible you don't have as much benefit of that if you have smaller transactions in dollar amounts that are also rarer or they don't happen as often paying the phone bill 70 dollars today versus 15 days from now doesn't save you much money but if you were had thousands of transactions that are happening for thousands of dollars then paying today versus 15 days from now can be impactful due to the time value of money so in any case this has a sub ledger account as well so if I go to the tab to the right and I open up my reports then all of the reports under this one what you owe are basically tied to that accounts payable account similar to what we saw with the accounts receivable so for example if I go into this accounts payable do do do do I want to just go into the vendor balance summary let's go into vendor balance detail so there we have it nothing's in it right now let's see if I go to the dates custom date as of 013124 and run it so nothing's in there do I don't have anything yeah nothing's in it nothing's in it right now so that makes it easy all right but if we drill down on it if I click on it what's the activity in here you're going to see it increasing with a bill let's go back one more day to or year it increases with a bill and then it decreases when we pay the bill that's all you expect to see in here so just those transactions it goes up and then it goes back down obviously we also manage this information in the customer in the vendor center internally as well then we've got the visa we haven't done much for the visa but if you were to pay off your expenses as they become due with the visa account your credit card account it will function much much like the checking account a lot of times it's harder for people to envision that but it's the same thing like you can use bank feeds on it which we will do in a future course or section and you can track that information increase and decrease and it's just that instead of the checking account going down when you buy stuff and expense it the you can have a liability going up and then you'll pay off that liability so that's a so it's easy to kind of track but again you'd like to be using the checking account obviously from a practical standpoint or you would at least like to be paying off the credit card so you're not getting hit with those interest charges and then we've got the other current liabilities everything that doesn't have a special category the reason the visa has a special category is the same for why the bank accounts do because you could connect them to bank feeds everything that's not connected to the bank feeds and whatnot is in other current liabilities these are going to be the this I believe are the accounts for the sales tax so sales tax if you owe sales tax and deal with sales tax that's going to be something different from location to location if you're outside the United States then you have to deal with whatever tax system that you are in as well might be like a usage tax where you would have a similar kind of situation remembering the full accounting process is the same double entry accounting system same doesn't change taxes laws change with bookkeeping tax laws the biggest implication that will change from place to place in the United States we have federal tax is an income tax not sales tax the sales tax are then charged by the state and local areas and they will be going up when we have invoices and sales receipts the sales forms and they'll go down when we pay the sales tax which we have not yet done so I'm going to go back on out and then we have the payroll so we have the payroll liabilities these would only be here well they're only going to be generated automatically if you're processing payroll within the quick books system and then they will be generated when you process the payroll because of the withholdings and then we will pay them off and they will go back down if you're doing payroll outside you have an adp or a paychecks for example then you might still enter the liabilities on a monthly basis or a pay period by pay period basis based on the reports that you get from the from your payroll provider and then you can enter it more easily right you don't have to enter all the detail you just have to enter the liability or you might just stay on a cash based system and just record it as an expense whenever it comes through the system whenever you actually pay the cash and then tell your accountant or tax preparer at the end of the year to take the payroll reports and they would then periodically do the the adjustments to things like the payroll liability account and possibly breaking out the payroll tax so that system could could work and that gives you our liabilities and then we have the equity side of things where we have the opening balance equity it's never been used except when we set up the account and then we cleared it out because it looks ugly because it's it's an unprofessional account because it's a it's an account that just got money dumped into it which doesn't look good so then we have the owner investment account the 65 000 that's us as the owner putting money into the company if it was a corporation it would be called a capital or the the the stock the common stock that was issued we don't expect much activity in here of course because we don't want to be putting money into the business all the time that happens rarely hopefully when we start the business and when we grow the business and want to like expand it otherwise we would expect money to be coming out of the business in the form of draws this account classically usually then would also be rolling into the equity account of retained earnings or opening equities on a yearly basis if not monthly basis but quickbooks does not do that automatically so if you want to do that you'd have to close it out with a journal entry at the end of the year if you don't do that it's okay but this account will just be representing your investments over the life of the business as opposed to the last year of the business the owner's equity is the account that's similar to the retained earnings you can it's for for sole proprietorship it is the retained earnings for the sole proprietorship and you can see that that i can't click on this account because this account has a special use it's the account that basically the net income is going to roll into the net income down here so it represents the net income not of the last year but of the life of the business that has been accumulated which has not yet been given to the owner in the form of if a sole proprietorship draws if a corporation dividends also the investments could roll into it uh as well so so if you're a sole proprietor net income this is not an actual account the net income isn't is something that's trying to show how the income statement is related to the balance sheet so the income statement is over here here's our net income seven four two seven forty four same amount over here if i go up one year to 010125 to 123125 that net income rolls in to the equity account so it does it automatically notice it did not roll in the investment automatically so if you wanted to roll that in you would need to do a journal entry on a yearly basis perhaps let's go ahead but if you don't it probably be okay 010124 to 123124 and so let's go back over and then let's go to the income statement the other major report otherwise known as the profit and loss so in the income statement notice the sales lines all the sales that we made we sold a whole bunch of different kinds of guitars and we had different types of services but we did not record income into all these different kind of accounts we didn't record the income into every different kind of guitar we sold or income into every different service item we had we might have some categories that we want to put on the income statement but you don't want to have too many categories one reason being because you will typically have sub ledgers to help you out with that similarly you don't typically want to have a different income account for every customer notice we we dealt with many different customers i don't see which customer we dealt with on the income statement but i can look at that information typically on sub ledgers let's take a look at that if i go to the tab to the right open up the hand boogie go to the reports close up the hand boogie and if we go down to these sales and customers these reports most of these have to do with more information about the income line items which are revenue income sales are terms often used so you can break out the income lines by sales by customer and you can break it out by product and service that'll give you more detail now note that those those sub ledgers will only give you let's let's take a look at one of them income income by by sales let's say income by customer summary let's do this one income by customer detail and then sales by product summary let's do that one so if we look at those as of let's go from 010124 to uh 013124 oh man 013124 run it and we got 53 987 and this is my income by who we sold it to if i go back on over to my income statement way over here and i look at my income 53 857 is that what i had over here 53 987 what's the difference let's take a look at it 53987 minus the minus the 53857 is $130 difference where did that come from that's because we had that funny thing down here with the negative supplies that's throwing us off so notice that this report doesn't have to tie out the sub ledger because it's possible to record something to to income that doesn't have a customer related to it quickbooks doesn't force you to do it as they do with the balance sheet where they force you to have a customer every time you hit something to accounts receivable or accounts payable so that means your sub ledger might not always perfectly tie out but if you use the sales forms invoices and the sales receipts when you record something to your income accounts it should tie out if you're not using those forms you're using a balance sheet possibly because you have gig work something's coming in from youtube or something then you're not going to have these sub ledger reports because the that deposit form isn't the form that quickbooks wants to use generally for the sales items you might still do that that would be easy to do in certain businesses and in that case you might have an income account broken out in essence by customer or by platform youtube income right versus whatever platform income might be appropriate and that's case this one is broken out by what we sold so the guitars and the other items that we sold 44 287 if i go back on over here we're at the the dududu dududu we're at here the 53 so now we've got 53 857 minus this is coming out to minus the 44 287 is a difference of 9570 okay that's too much of a difference there's the dates off hold on oh one i told you it was always a day thing oh one 31 24 let's run it and so now we've got uh 53 987 all right back to the profit and loss 53 857 so i won't go into detail on that one we're running long on time but similar similar thing we break it out by item now the cost of goods sold i know notice the revenue accounts if i go into the revenue accounts they only go up right all of the income statements accounts should only go one way you don't see the decreases because it's like driving a car to see how long you're going to go in a certain time frame you're only going one way up right the odometer is going one way up so typically that's what all of your income statement accounts will be doing income goes out with invoices and sales receipts if we look at the expense side of things they always go up typically as well but when we look at the net income these two things that go up are going to be subtracted right so if i go to the cost of goods sold those are going to be recorded even though they're an expense with the sales forms if you're using a perpetual inventory system invoices and sales receipts because when those things happen you are recording revenue related to them but you're also recording the expense of the thing that just sold to help you generate the revenue and that gives us a sub category down of gross profit income minus the cost of goods sold and then we have all of the other expenses so we had payroll expenses which we saw were processed when we uh when we process the payroll and the wages so those will be impacted every time we process the payroll taxes and wages and then we have all the other categories of expenses which will typically be the easiest thing to do the data input because oftentimes you can use bank feed for those expenses that happen on a cyclical process and we'll talk more about bank feeds and future presentations but the forms you would expect to see then is an expense form now we used a check form in some of these and we messed up with this one with an invoice just to show a weird thing happening but you would expect to see if you use the bank feeds only expense forms basically in here and like utilities you would only see like expense forms normally or if you use checks you would only use check forms those two forms being similar except the check form has check numbers within it all right so that's the general idea i'm going to go to the tab to the right now and let's close this one up let's close this one up and i also want to go all the way down to the accounting reports and let's open up our that's payroll accounting for my accountant i want to open up the the journal report right click and open the journal report and then i'm going to go over here and take a look at the transaction transaction list by date report i'm going to right click and open that report so a quick reminder on the on the trial balance so the trial balance is the balance sheet on top of the income statement we've talked about it at the end of every presentation so i won't go into it in detail here but you can get the general idea assets up top are typically basically debits except that funny contra asset representing what the company has without all the subtotals and whatnot represented or measured in dollars and then the liabilities in equity represent who has claim to those assets and we can see these are the liabilities down to here down to here and then here's where our equity starts the whole income statement you can think of as more detail about one year's worth of equity because the balance sheet is reported as a point in time the income statement is a time frame therefore if i was to close this out all this bottom bit will just close out to here all these if i just add up the the credits minus the debits it'll end up with a credit balance if the if the company is a going concern meaning it's it's not underwater so let's go from let's bring this up from 010125 to 123125 and you can see then it stops at equity and everything rolled into this 85323 so all of the income statement is detail about what happened over a point in time that is you can think of as a part of equity it's breaking out a year of history that got us to the point where we are equity equity being represented by the accounting equation showing as assets minus liabilities is equity right so let's go back to 010124 to 013124 run that then if your numbers tie out if you're following along with this if your numbers tie out here great you should be good to go up to the next month well we'll do the next month of data input if not then we can look at these reports over here to give us more detail about them now the major reporter i think is best for this is this one actually this is the transaction detail by date so let's change the date i'm going to say custom date from 010124 to 013124 and so if your balances were correct as of the beginning of the of our system meaning the end of the last section so then we should so in other words we left off last time on the trial balance as of 123123 123123 this is what we entered last time this is where our trial balance was after we entered just the beginning balances that we imagined came from the prior accounting system this is our starting point this is all the detail that happened if your detail matches exactly on this side then your ending balance must work meaning if i then go to the ending balance of 010123 to 013123 then our uh 010124 013124 then your ending balance must tie out so if you can't figure out what went wrong then you can go over here and try to see if each of these numbers tie out which is kind of a tedious task but that could give you an idea of what is going on so if something is on our side but it's not on your side then you might want to change the date range and increase the date and see if there's an added item that's in there from a date issue and if it is drill down adjust the date issue if not that might be something that you need to add if there's something on your side that isn't on our side then the question is you know why is it did you enter it twice did something get entered twice or something like that possibly you would need to delete uh that transaction and if everything ties out exactly then we should have basically the same numbers now note what this report does is it's going to give you the transaction type that's the forms it's sorted by date over here which would be nice if I could see it so there's the date and then the posting maybe I can make this one smaller and then the location I don't think I really need that description and this is the split account there's always two accounts that are impacted so if it's a deposit form the primary account they think of as the checking account right and then where did the other side go this one went to the owner's investment so we have the inventory deposit let's look at an expense expense account the primary account is the checking account where did the other side go well in this case it went to the investments expense account checking account furniture and equipment purchase order uh this is this this actually doesn't have an impact on your financial statements so it's not actually recording a uh transaction what account are they saying here oh what did I do that's not what I wanted to do let's go back okay let's just look at a couple other of these uh and then we have the the checking the check so that's going to come out of the checking account as your primary account the other side it has a dash that means that it's a split account it might be affecting more than one account and that's where this report kind of falls short you'd have to drill down on the transaction to find the the detail then we've got the billable expense to do payment a payment the primary account is going to be the clearing account oh man it's kind of sticky it gets sticky here okay it payments to deposit the other account the other side over here okay that's the general idea now this other report I just want to look at it for detail this is the journal report this is a great report for learning the debits and credits now if you found some transactions over here that have that dash you can look at them over here and you can look at the full accounts that are affected are affected in debit and credit format you can also get an idea of what each of the forms are doing in terms of debits and credits so I'll just scroll through this one here so you can see this is an inventory starting this is a deposit form and you can see it's increasing the checking account and here's the other account that's affected the loan the loan payable account here's an expense form checking accounts going down with a credit investment here's an expense form checking accounts going down and then the furniture and equipment an asset account same thing here with an expense form here's a check form decrease in the checking account the other side's going into our inventory assets that were purchased and then we have this one we're checking account is going down inventory assets these are invoices which are somewhat complexly with the invoice so we've we've got the debit increase in the accounts receivable crediting the sale of product income inventory asset is going down balance sheet account cost a good sold expense account going up inventory asset going down cost a good sold going up and it's a long one why because there's multiple items that we purchase so it's recording each of the different inventory items I believe instead of grouping them all in together into one you know like inventory account doesn't need to be repeated if you were to condense the journal entry but because we had multiple line items and then the payment form payment to deposit debit accounts receivable going down with a credit and then your invoices again payment forms sales receipts similar to an invoice except that it's going to go into a cash type of account payment to deposit that's where the debit is and then you've got the sales receipts deposits to to to so those are just some some some to look at next section if your trial balance is is is all tied up then you'll be good going forward if not when you can try to start from that point going forward as well or follow along with the test drive or whatever you need to do but if this is the starting point where you're at now then we'll do a similar type of thing and after we're done with that we'll hopefully end up with the same ending balance and then we'll run these reports again to take a look at the detail of it