 QuickBooks Online 2023, add normal expenses to books from Bank Feed, Limbo, and Make Rules. Get ready to start moving on up with QuickBooks Online 2023. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Here we are in our Bank Feed's practice file. We started up in a prior presentation using the 30-day free trial. We also have open the free QuickBooks Online sample company. If you want the two open at the same time, we suggest using Incognito window or another browser. You can open Incognito window if using Google Chrome by selecting the three dots in the browser, Incognito window, typing into the search engine, QuickBooks Online Test Drive. We're going to be comparing the sample company or using it to compare the accounting view, the one that the Bank Feed's practice file is in, and the business view, the one the sample company is in. If you want to change between the two views, you can select the cog up top and change the view on down below. We're going to now be duplicating some tabs to put reports in. We're going to do this every time going forward because as we enter the information into the Bank Feed's, it will be used to create and construct the in-restult, that being the financial statement. So just a quick recap on that process. Remember that in prior presentations, we imported the Bank Feed information. So now we've got the information from the banks and what I call the Bank Feed Limbo, which is located in the accounting view on the left-hand side in the banking. And so there we have our information from the Bank Feed Limbo. These transactions down below, we want to add so that they're used to create or double check the data input for the financial statements. If in the business view, the Bank Feed Limbo is located in the bookkeeping and then the transactions up top, where we have the Bank Feed information in the business view. Now remember the objectives as we start to do our bookkeeping from the business perspective. Of course, revenue generation is the goal from the accounting or bookkeeping perspective. Our goal is to enter the transactions that are happening in the past or happening as we go as easily as possible, utilizing the Bank Feed's to automate as much as we can and being able to enter the transactions in such a way that we can communicate with the people we do business with well, customers, vendors and employees. So now we're focused on that end result, which are the reports. That's the end result of the bookkeeping we're looking for. We want those reports at least to make the tax returns from as well as external reporting and internal decision making. So let's duplicate some tabs to generate those reports. I'm going to right-click the tab up top and duplicate it. And then I'm going to right-click the tab up top again and duplicate it again. I'm going to start to do this every time. We're going to go back to the tab to the middle as the one to the right is thinking going into the reports on the left-hand side. One of the two favorite reports will be the balance sheet. It's almost always going to be in favorites up top because these are the financial statement reports. So we'll go into the balance sheet. If you're in the business view, by the way, the reports are located in the business overview and then into the reports on the left-hand side. So there's our balance sheet. I'm going to change the range. Going from 010122 to let's say 123122. I'm adding data or detail from the bank feeds in the year of 2022 in my example problem. We're going to run it. Let's go to the tab to the right. Do the same thing. Reports on the left, but this time open up the profit and loss. The income statement type of report, the P&L, different names for the same thing. Close up the hand boogie. Changing the range from 010122 tab, 123122 and run it. So obviously nothing is in it at this point in time, even though we have data in Bank Feed Limbo. Back to Bank Feed Limbo in the first tab and we're going to be entering the data. So now I'm going to look for those types of transactions that are probably the easiest types of transactions to enter into the system. Those being the normal kind of expenses, things like the utility bill, the telephone bill, and so on and so forth. So if I'm looking at my flowchart, I'm looking at the vendor or expense cycle, payable cycle, you might call it, where at the end of the cycle we would expect cash to be going down for goods and services that we are purchasing. Now the easiest way for that to happen with the use of bank feeds is that we set up electronic transfers. We pay our transactions as they become due for the telephone bill, the utility bill, and so on and so forth. Wait till they clear the bank and then we just record them with the bank feeds as they do so. That's what we're going to do now. The second easiest method or step away from that, a cash-based system, but one that you're not completely dependent on the bank feeds is you write a check, a physical check, which you enter into your accounting system when you write it. And then when the check clears, it will clear with the bank feeds and you use the bank feeds to match your data input. That's more of a full service accounting system because now you're using the bank feeds to verify, help you with an internal control, help you do the bank reconciliations. Or you might have an accrual system where you put the bill into the system as a bill, increase in accounts payable, a non-cash related item, not connected to bank stuff at all. Therefore, the bank feeds can't help you to record it and then you pay the bill and then you usually match it with the bank feed. So we're doing the easiest thing here. Small businesses often will do this, right? We're going to just pay the bill electronically. We're going to try to make everything automatic and then we're going to record it with the bank feed. So let's go back on over and look for a bill that would be good to do that with. I'm going to sort by the date here and so I've got the older stuff up top and I'm going to look for... Let's sort it by actually description. I'm going to sort it by description and I've got this SoCal gas bill. So you've got the detail in the memo. Now remember in the cog up top, I checked everything off or typically my general rule would be to go through here. I'm going to check everything off. So I'm going to check that off as one line and then I'm going to check off basically all of this stuff that I'd like to see. And I'll make it 300. Every time you go out and back into it, you might have to adjust that. And then going down, I'm going to be picking up that line item of the SoCal gas. So I have the full description here of the whole, all the stuff in the memo. And then the payee, we're not, I could try to add this kind of as we go, but it's going to be information that's pulling from oftentimes the description information. Now, if this was a check, you won't have this description information, but you might have to cancel check. So you'd have to actually go into your bank and look at the cancel check to who you wrote the check from to. And then you have the account. QuickBooks is I believe just guessing the account that it should go to note that it's wrong right here. So if you were to just add this arbitrarily, then you wouldn't have a vendor to assign to, which isn't required but useful and it would be going to the wrong account because it's going to owner's equity instead of an expense type of account. So if you click on it, then you're going to open up the more detail on down below. We've got the category up top. This is where most kind of expense items will be a find a match would be a situation. For example, if you entered a check and then you're trying to verify this transaction, tying it out to the check doing a bank reconciliation kind of function instead of entering a transaction. We'll talk more about that later. I'll record a transfer as transfer means that instead of using like an expense type of form, which is the type of form that will be generated when we enter this into the system, it'll use a transfer type of form useful to clarify some of the detail of the transaction when there's a transfer between two different checking accounts. For example, record as a credit card payment. That's similar to a transfer type of transaction, but it's a transfer specifically to like a credit card. So it's going to do the same kind of transaction, but the transactional detail will look a little bit different. We'll talk about that when we get to credit cards. We're going to record an expense type of form generally, which will be the category. If it's a decrease default category, it'll be an expense type form that's generated from this bank feed data input. If it was an increase, then it would be a deposit would be the default. The date is coming from the bank feeds. So that's probably not something that you're generally going to want to change the customer or vendor if we had a customer or vendor already set up. Then we don't want to duplicate or have like multiple customers that were paying to the same place because that messes up our sorting kind of stuff. Now note that if you could record the transaction without a customer, the only required field you could see with the asterisks is the category or account. But adding the customer is something you generally would like to do because it'll give you some more sorting information by customer. Now, since you're not tracking accounts payable and whatnot, it's not as necessary to deal with your customers. It's not as vital as if you were dealing with a customer that you call up and contact with like someone you might buy inventory from, but you might still want to sort the transactions by customer. So I always recommend adding them. You can usually get the information if using electronic transfers from some detail in the memo. So I'm just going to try to copy this part of the memo, put it up here in the customer or vendor and then I'm just going to add it. So if I hit tab, it'll ask me to add it and I'm going to say, okay, let's add it. Do I want to add it as a vendor or a customer? It's going to be a vendor because we're selling to them. We can import or add more detail as we do this. This would mean do I want to add a telephone number and whatnot, a bunch more detail to it? If it's just the SoCal gas company, we probably just want the minimum so I can sort by who we paid to. So I'm just going to save it as is like that. Then the category. It has no category here by default because we've never categorized it before. So I'm going to select a category. So this is going to be like utilities or something like that. Now notice in the general ledger account, we deleted all the general ledger accounts because I want to show you how construct them as we go. Let me jump on over to the general ledger real quick. I'm going to go to the tab to the right, right click on it, duplicate that tab, bring that back to the left hand side and then go down to the accounting on the left hand side and we're in our chart of accounts. If you're in the business view, by the way, that is located in the bookkeeping on the left hand side and then the chart of accounts. So remember that the chart of accounts by default gave us this whole long list of chart of accounts. Now, generally with the expenses, my general rule would be use the chart of accounts that they give you as like a guide. If you don't have any idea of the accounts that you're going to set up and if you don't like the name they provide, then use that account and then go into your chart of accounts and adjust the name by editing the account to the name that you prefer. Instead of having two accounts that have a similar name, which will mean that you're likely to post to two different accounts that are basically the same kind of account in the future. And if there's no account at all, then you add the account to the system after two months of data input, then go back into your chart of accounts and make all the accounts you're not using inactive so you don't have all these excess type of accounts. But if you have some familiarity with what you're trying to do and you'd rather just construct your accounts as you go, which is what we're going to do here, then we can go in and delete all the accounts like we did and we're going to just build them as we go. Now this first account, then I'm going to add it basically as we go from here instead of adding it in the chart of accounts. I could go to the chart of accounts and say new account and add the account here, but oftentimes we will just add the accounts as we're categorizing them right in this field. So this is going to be an expense type of account. So I'm going to say it's going to be a new account. It's going to be an expense type of account. So we'll hit the dropdown. Most of the outflows will be expenses. I'm not too worried about this added detail type of account because it doesn't really add a whole lot, but I'll pick utilities in this case. And then I'm going to say the name. That's the important part. Now notice this is the gas bill. So this is where your questions come into play in terms of how you want to group your accounts. Some people make way too many expense accounts, get way too detailed, have way too many sub accounts. Other people don't make enough expense accounts. They just want to make like one account called expenses. That's not detailed enough. You want to find a happy medium that fits in with your company. So for example, with the electric bill, do you want to group one utility bill that adds like phone, the electric, the gas, the trash all in one account? Or do you want to have a separate account for each of them, a separate account for gas bill, separate account for electric, a separate account for the telephone, for the trash? Or do you want to have a utilities parent account and then a bunch of sub accounts underneath it so you can collapse to one parent account called utilities and then have all that detail below it? In my opinion, most of the time, utilities used to include telephone and the electric and the gas, but I feel like the telephone breaks out into its own area now because it's fairly expensive. And so I won't even put it under utilities anymore. And then the gas and the electric, I feel like I can still group together under one account called utilities. That's what I typically do. So that's going to be my method that I will use here. Just put it under utilities. I'm going to say OK. And so there's our account. Now the tags are those specific things that you can add if you want some more sorting data, kind of like classes if you've dealt with the classes. So there's the transaction. We can add attachments. If we want to attach something to it like the actual physical bill, if that would be useful to attach, we can create a rule which we will do shortly. Excluding it would basically kind of try to delete it and category. We can look at the categorization history. Then we can look at the splits or we can add now the split allows you to assign to multiple categories. So notice you only have one category here. If I if I'm going to say, hey, I want to I want to have two utility bills because I have two accounts or something like that. One for one location and another for another location. Then I can I can use a split field to break that out. So that could be quite useful. That's quite nice to have that so that you don't have a transaction that's limited to only two accounts. We don't need it here. Adding it would pull it from here into the promised land and record the transaction. But I would like to create a rule as we go. Now, remember, if you do not create a rule and you just add it, QuickBooks might then ask you to create a rule. But I want to actively create the rules as I go making it easier and easier going forward to enter the transactions. So I'm going to make a rule. I'm going to name the rule usually the same name as I pulled from the the the information for the vendor. It's going to be a payout rule as opposed to as opposed to money in type of rule and then all bank accounts. So do I wanted to apply to all bank accounts or just the one that I'm currently in doesn't really matter. In our case, because well, I'll choose all bank accounts in our case and include the following. So we have the choice of any or it has to have all of them. We're only going to have one rule here. So it doesn't matter if I choose any or all, but the difference would be and we'll talk more about this later when we dive into rules. If you have multiple rules, you could say it needs to pass all of these rules in order for the rule to apply. Or you can say it just needs to complete one of the rules. Any of the rules is good enough to apply that rule. So it doesn't matter this way because we only have one rule. You're going to pull from the description or the bank text. Now, if you have a problem with the rule applying, try taking a difference between the description and the bank text. Because the description might be what the QuickBooks pulls in to the memo area area when they truncate this memo information. I believe the bank text is showing all of the information. So I like to use all of the information so that I can make sure it's not just being truncated from what QuickBooks is doing. I don't need all this detail. I just wanted to say, hey, look, if it contains, so Cal gas company, that's all I need. And then I'm going to say it contains or doesn't contain or is exactly. I don't need it to be exact doesn't contain. No, I'm going to say contains. That's usually what what the default will be. You can test the rule here. So if I hit the testing of the rule, this rule will apply to three current unreviewed transactions. So I believe that makes sense. And then the transaction type is an expense account. This is what we already set up before in the prior window. The categories, utilities, the payee, the vendor, so Cal gas company, no tags are applied. The bank replace the bank memo. So this is it's pulling in the memo information. So automatically confirm transaction transactions. This rule applies to. So this would be do I want you to automatically add the transaction? Oftentimes when I'm starting out, I'm going to say, no, don't add it automatically because I want to verify that the rule is correct and give at least that final check before you finalize it. And then later on, you might just verify it so that it just adds it to your financial statements without even you glancing at it. But I'm going to turn it off for now and then I'll save it and boom, the rule has been applied. So now we've got these three transactions that have a rule that has been applied to it, which is nice. And also note that I can scroll up top here and I can sort now that the rules are applied. So if I have a bunch of rules that have been applied, then I can sort by the ones that have a rule applied to it. And that'll pull these on up and filter by the items with a rule. OK, so I'm just going to add one of these. I'm going to add this one right now and just look at the look at what happens to the transaction. So if I click on it, I can accept it. I could click on all of them and accept them at one time. But I'm just going to add this one or if I wanted to just add that one, I can click add over here. So I'm going to go ahead and add it. And that takes it out of the bank feed limbo and brings it on over to the promised land. So it's now been categorized. So you can say the second tab over here is where you have it as having been categorized. This has been added. So if you if you log out and you go back into the system, you might not always have these items that will be categorized. But if you're currently working in the session, the items that you have added will be in the categorized area over here. And it's been pulled away or out of the items on this side. So if I say rule applied, I still have these other two that have the rule applied to it. Okay, let's look at the financial statements. If I go to the balance sheet and run it then obviously that the cash account has been affected so I can drill back down now from the checking account back into the transaction. And now we've got that transaction. There it is. Notice the form used an expense form. So it's not going to take me when I drill back down to the source document to the bank feed data input screen. It's going to take me to an expense form. The bank feed data input screen is a shorthand way for us to enter the transaction. So online banking matches. So this is this gives you a link to the actual detail for for the for the bank which says matches, which kind of indicates like you enter the transaction and then you matched it know what happened as you created the transaction from the bank. But obviously it matches what is on the bank helping you with the bank reconciliation because of course you constructed it from the bank. So closing this back out scrolling back up. I'm going to go back to my reports if I go to the tab to the right where we put the income statement. Now we have something on the income statement. We have the utilities account that we have put in clicking on that. There's the utilities account being constructed as we go. So that's one of the easier types of transactions to input. Now note that we don't really need the vendor to make the the the transaction or the profit and loss. Notice I have it here by category what we used it for not by vendor. So we don't usually want to put I got I got an expense a SoCal gas expense. Now we say utility expense but sometimes we might want to you know sort our information by vendor or track who we paid. So it's possible to add the information from the bank feed without adding the vendor. But you still want to add the vendor because why not have that added information and how you might use that as you might go to like to the first tab over here and you could go down to your your hamburger and I could go into the the the vendor section which is under expenses which I would call like the vendor center closing up the hamburger. If you're in the business view by the way I've got too many views floating in my head. If you're in the business view it would be under the get paid and pay area. And then we would look at the pay area and then if I go over here and I look at my my vendors I can go into my vendors over here and then there's my SoCal gas and if I go into SoCal gas I've got my transaction for that particular vendor. So if I wanted a question about that particular vendor whether I paid them or not I can go into here and search that that information. It's not as vital a tool as it would be if we were tracking like bills because we're not tracking bills we just entered the expense we paid it as it became do but it's still useful to track in that way. You can also go to the expenses tab and I can sort and filter my information here by say expense forms that are being created or any way I want to filter it and I can search for my transactions that way as well. If you're in the other view by the way the bank feeds practice file or if you're in the sample company this is this other areas in bookkeeping and then transactions and then it's in the expenses tab. So it's a bit different location there. All right so let's do it again. I'm going to go back on over and let's go to the to the banking information and I'm going to I'm going to exit out of the rule that I put in place here and then I'm going to go down and let's let's add like a telephone one this time. So I'm going to add this telephone one here. So I've got my description that looks good. This line I'm going to need the payee so I'm going to just hit the drop down this time and look at the added detail. It's going to be a categorization instead of a match instead of a record transfer and so on the date is from the bank feed. So that's typically what we're going to be keeping there. The customer once again we don't have one because this is the first time we're doing the data input. So I want to be picking information from the memo which is pulling in from the bank feeds and usually use that to create a vendor field noting that if you don't put a vendor QuickBooks will not will still record the transaction as long as you have a customer. But you want to make sure to add something here because you want to have a vendor typically because it'll give you that added detail. So I'm going to I'm just going to paste that in. I'm going to make the vendor as a vendor. I'm not going to add any more details like the phone number or anything to it. I just want to know who I paid and be able to track it that way. Notice it's trying to categorize it to services which is an income account. That's quite strange. You don't want to do that. Obviously QuickBooks has a very limited number of accounts to try to guess where it should go because I deleted all the accounts. But I don't trust QuickBooks to do that anyways. That's why I deleted the accounts. I want to construct where I want the accounts to go and build the accounts as I set them up. So I'm going to then say let's create a new account just like we did last time and it's going to be an expense type account. Most of the accounts are going to be expense accounts because most of the transactions will be decreases to cash. I'll put it under utilities again. I'm not too worried about this subcategory. I'm more worried over here. Now once again you have your decision making. Do I want it under utilities? No. I don't want it under utilities this time and I don't want a parent account of utilities. I just want to break telephone out by itself. Telephone now you might call tell you might call it the phone. You might call it telephone. You might have it. You know cell phone whatever you want to call the phone bill. You might have multiple phone bills these days. It used to be telephone was under utilities. You might say now I've got telephone as a parent account and then cell phones versus landline versus whatever phone bills you know you might have you might put your cable bill under the phone bill. I don't know so but it depends on what how you want to track things personally for yourself. There's no hard cut line in terms of exactly what you need to do on those groupings. It matters most in terms of what's going to be the best breakout of the information for your internal management reporting purposes. Sometimes there's tax implications for certain things like auto expense and stuff but you know you have to first do what's best for you and then you got to deal with any kind of tweaks that you have to put in place to deal with the tax code which is inevitable tweaks are going to be needed. So telephone we're going to save it save it and close it and then I'm not going to put any tags on it. So that's that added kind of idea we could put attachments. I'm going to create a rule for it. Let's create a rule. I want to make my own rules as we go. I don't want to just rely on QuickBooks to do the rules because they might make funny rules and I want to make the rules the way I want to make the rules. So we're going to save Verizon wireless. It's going to be a money out rule because money is going out. It's going to be all accounts. I'm going to say OK let's do it for all accounts. That's fine. And then all all of the conditions have to be met or possibly some of the conditions have to be met. I'm just going to keep it at all conditions. Then we have the description versus the bank text. I like choosing the bank text it contains. That's usually the default that you're going to have. All I want is Verizon wireless. I don't want any other junk in the memo. You could test the rule. It's applying it out to three areas that looks right. Expenses is the expense for telephone is the category. Payee looks good. We'll keep the memo in the memo line. I'm not going to add it automatically but I wanted to give that final check off manually even though it's going to give all the information to the other ones itself. I'm going to save it and let's check it out. So save it and check it out. So there's the rule has been applied. If I scroll up top and I filter my transactions by rules now rules applied. You've got the utility rules and these telephone rules. So I'm going to apply the rule to I'm going to add this one only this time. So I'm going to add it. I could check it off and add it here. I can check all of them off and add them at one time. But I'm just going to add it this way just that one for now and there is that now by the way the rules are located up here. So if I go to the rules and I need to adjust my rules I can go into my rules. These are the two rules and then I can edit the rules and that'll give me my editing information. So those are the rules that are applied. If you just let QuickBooks do the rules willy-nilly anyway they want you might end up with a bunch of rules some of which do or do not apply and they're not specific to what you want. You might not have an idea of what they're doing which can be problematic. So I would try to try to make your rules. I mean the better you set it up when you first set up your stuff the easier it's going to be in the future. Okay so I'm going to then run it and then if I go into my checking account drilling down on it we've got ours are Verizon if I go into the Verizon it's going to show us an expense form a form that decreased basically a check form that without the check number. So I'm going to close that back out. The other side is going to the profit and loss. I'm going to run it to refresh it and there we have our telephone if I go into the telephone then we have our telephone bill I can zoom back drilling down to the source document once again make the expense form. So you see every transaction has two accounts affected to it we're recording the transaction we can enter it we can double check it on the financials. Let's go back to the to the first tab and I can open up the hamburger and scroll down to the expenses area and note that I can search by vendor now and look at my detail by vendor I also might have some other reports that I can generate reports by who I paid by vendor and that could be useful for like 1099 reporting and whatnot if you're paying to contractors so that you can know who you paid and set up your vendors and make sure you're abiding by those requirements and then you can go to the expense tab and you can also sort by your transactions you're paying out transactions over here. I'm going to open my trial balance just to show another report that you might use to kind of check your data input that's a little bit easier to use then the balance sheet and our income statements I'm going to go to the reports on the left hand side I'll type in up top just trial balance and this is basically the balance sheet on top of the income statement so if I run this from 010122 to 123122 and run it so now we've got the balance sheet accounts cash and then equity accounts on top of the income statement accounts. So notice how much more streamlined this is to look at then go into the balance sheet which has all these sub accounts there's not very much of anything going on it's still fairly long and then the income statement so as your reports get longer if you just want to go here you can look at basically your chart of accounts and the numbers and drill down on them in the same way as you can with a balance sheet or income statement but have all those accounts in one place so we'll get into some more complex transactions and future presentations