 0 Accounting Software 2023 Bank Feed to Bank Feed Transaction Get ready to become an Accounting Hero with 0 2023 Here we are in our cusp. First a word from our sponsor Well actually these are just items that we picked from the YouTube Shopping Affiliate Program But that's actually good for you because these aren't things that we're just given to us From some large corporation which we don't even use in exchange for us selling them to you These are things that we actually researched, purchased and used ourselves Bayer Dynamic? Not sure if I said that right but this is the DT770 Pro 250 OHM Studio Reference Closed Back Headphones I wear headphones basically every day for a large part of the day They are important to me therefore I've gone through many different kinds of headphones I've had these for some time and they've worked quite well They fit over my ears but I'm still able to put my glasses on under the headphones The headphones not pinching too tight on the glasses to give me a headache which is nice The quality of the patting is good and it has lasted for some time I've had these for some time now and they haven't gotten all torn up on me or anything like that I also like that I have a cord when I'm doing my recordings as opposed to a USB centered headphone Because that frees up a USB port and I find the USB headphones to be less reliable They come with an audio jack that looks like this which is useful for me because that plugs into my audio interface However if you want to use the headphones for some other purpose I believe it's fairly easy to get a converter to other types of audio jacks If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com Where we have many different courses you can purchase one at a time Or have a subscription model giving you access to all the courses Courses which are well organized have other resources like Excel files and PDF files to download and no commercials System zero homepage going into the company file we set up in a prior presentation the bank feed file Duplicating some tabs to put our reports in the balance sheet the income statement like we do every time Right clicking the tab up top to duplicate it And then we will right click the tab up top to duplicate it Back to the tab to the middle accounting drop down we want that balance sheet report And then we will tab to the right and go down to the accounting drop down again and of course the income statement Changing that range in the date range that is dropping it down to 2023 January to December of 2023 The 31st of it where is the 31 there it is and update Alright let's go to the first tab and open up our bank feed information That's in the accounting drop down the bank accounts we put our banking information in here We've connected our checking account and we've connected our credit card account So now we have what I would call like a bank feed to bank feed type of transaction Which actually could be a little bit confusing when you first take a look at it Now of course the bank feeds are designed to lower the level of confusion But when you have a transaction that is involving such as paying off the credit card Two accounts that have bank feeds connected to it Then we have to think about well which side do we want to start from when we record the bank transaction for example So let me just kind of point out the issues and this is also just useful to note When you're thinking about a transfer So anytime you're transferring from like a checking account to like another type of checking account You have similar kind of issues that can come into play So for example with the credit card it's going to be money coming out of the checking account In order to pay off the credit card So that means that both sides of the bank feeds will be able to read the data on their end On the checking account it's going to be a decrease Looking like a payment for something of course to pay off the credit card And then on the credit card side of things it's going to be showing as a payment So meaning lowering the credit card liability So from a bank feed standpoint we can start the transaction from either side I could go to the checking account and I could find it in the bank feeds And then record it and then hopefully be able to match it to the credit card side Or I could start at the credit card side and I could record it And basically match it to the bank feed side of things Now note I also just want to point out the difference between like a deposit type of form An expense type of form or a money in, a money out form And then like a transfer type of form And this I think makes a little bit more sense if you imagine that you had a similar transactions With two checking accounts like maybe one's a savings account And the other's a normal checking account And you have a transfer from the checking account to the savings account So note that when you do that with just a normal transaction If you're thinking about debits and credits or the two accounts that are impacted Increases and increases it's easy to think about You just say okay well the checking account's going down, credit or decrease And the other account the savings account's going up Therefore debit or increase But when you start to add the forms to it We add a level of complexity And that's important because if I go into these accounts Sometimes I want to filter these accounts You may want to at some point filter these accounts by source document So if I'm trying to sort my information by the increases to the account And the general ledger I can go up top and I can filter I can use my filtering tools and filter by the source Which is here's our sources Now normally when I go into here I would think that a Received money form would be an increase And a spend money form would be a decrease So if I'm trying to look at the general increases I can basically filter this and say How about I just look at the receive money forms And update the reports And see if we can pick up the increases So that becomes useful for filtering your data Now if you used to transfer from one account to another Like a deposit form Then the deposit form would be useful Or you can use that on the side with the account that's getting the money In this case the savings account I can use a deposit form to increase that account And that would look normal on the savings account side But it would look strange in the checking account side Because I would have a deposit or receive money form Which is actually decreasing the account Which makes it difficult to sort by Because I would like everything that has a receive money To be increasing the both of the accounts The same is true if I use a spend money form I could use a spend money form To transfer from the checking account to like a savings account Which would look correct on the checking account side of things Because it's a decrease and it's a spend money form But in the savings account It would look like you have a spend money form That is increasing the account over there So again it would look funny And that's where the transfer comes in So the transfer is doing the same thing From a journal entry standpoint Debits and credits are increases and decreases For two accounts But the transfer doesn't really look funny If it's an increase or a decrease Is the general idea So keep in those in mind If I go back on over to my credit card I'm just going to click on the credit card This is the fast way to do it And then go into my reconcile We left off with just these payments now So these are the payments to pay off the credit card balance Now note when I enter these payments I will not necessarily be at zero At this point in time in my credit card balance Because we still have that beginning balance issue Which we'll talk about when we do the bank reconciliation But for now we could just recognize that For this 47729 Is also going to be on the banking side of things If I go to the bank account In here and I go into my checking account We would expect in the reconcile We would have that 47729 here So I can kind of verify that they're on both sides of things If I verify they're on both sides of things And zero didn't like pick it up And match them automatically As they didn't hear Then I can enter a transaction for it And I would think the easiest thing to do Would be to enter it on the checking account side of things That's what I would normally do In other words we enter it over here On the bank feeds for the checking account And then we'll go over to the credit card side of things And match it on the credit card side of things Because the other side of the transaction Will be going to the credit card account And the natural thing to do would be I'm going to just create a transaction here But note that zero is actually not going to let you post something To another account that has a bank feed to it Instead they're going to basically say You've got to use the transfer thing Which kind of makes sense because then They're going to stop you from doing that kind of problem Where you can still kind of record something But it doesn't look quite right In other words it doesn't have the best form That could be used In other words let me show you what I mean here If I try to create a transaction here To pay off the credit card And I go to add details And I say okay If I was going to go down here and add the account The other account is the credit card account But they don't give us the bank accounts down here They're not going to let us record a transaction To another account that has bank feeds Because I believe the rationale for that would be You don't want to use this kind of form here You want to use as a transfer form In this kind of situation So therefore We can cancel this Now before I cancel it just note That if you're a little skeptical about the whole thing You could record the transaction to Like a clearing account I used to do that when the bank feeds were like newer I'd record it to like a clearing account on this side And then when it goes to the credit card side I'd record the other side to a clearing account So the clearing account zeroes out And that made me give me kind of like a double check That everything is working Because I was a little bit skeptical to record these bank feeds Directly to another account But I'm more confident with them now So I don't do that anymore But you could do that if you wanted to You could post this to a clearing account And then the other side You could post to a clearing account So you could make a clearing account Would be like some kind of balance sheet account You could make it another current asset But I'm going to cancel this And then say let's try the transfer And then we're just going to say It's going to be transferring to the credit card Reference, not this one Hold on a second I'm on the wrong one How did that happen? I'm going back up here We're going to go to the transfer Hopefully that's still all made sense We're going to try to transfer it to the credit card Let's just call it payment And then we're going to go to the credit card And then we're going to go to the credit card Payment And I'm going to say Okay So we transferred that over If I go to the balance sheet then And we update the balance sheet We should be able to check it out So I'm going to go into my checking account here And let me show you what I mean by this Sorting thing Because we haven't done a lot of the sorting If I filter A common filter tool Is by the source Which is this column here And then we might be able to say Okay, can I find a transfer So they called it bank transfer So I'll just say bank transfer Apply that Update And then I can see My transfer So there's the 477 It's a transfer form As opposed to like a money A money out form, right? And if I go into it You've got your transfer thing here Instead of going back to the bank feed So if I go back And I go back Now on the credit card side That means it already recorded The other side directly to the credit card So I've already recorded over here So if I go on to the credit card I should be able to find my payment in here Which was done in the form Of a transfer So if I go down We now have our payment So now we see it here In the form of a transfer So that's all we should see on the credit card side The credit card side should be a lot easier To look at In terms of the kinds of transactions Then the cash account noting The cash account being the lifeblood of the company Has the most different kind of things Going in and out of it Whereas when we look at the credit card We're going to have a lot of different things That we spent money on Or charged on our credit card for But they're all going to be like To spend money for them And then we're going to pay off the credit card That's all that should basically happen here Usually So you can imagine Other scenarios where you pay the credit Other stuff with the credit card But normally That's what you would see there Alright let's go back to the first tab Now you could do this the other way Well let's go to the credit card thing I'm getting ahead of myself Let's hit the drop down Let's go to the bank accounts And let's go into the credit card Side And I should see that other transaction That has been created But not yet reconciled You can see it down here in the bank account transactions So these are the account transactions That we made related to the credit card That weren't That weren't made by the bank Or that we created as we reconciled So how in the world did this get created Because that doesn't make any sense Because I'm creating my books For the credit card transactions From the credit card bank feeds So how is it that I entered something on my side Without it having been reconciled Because I entered something on the checking account That recorded a transaction to the credit card side And hasn't yet been reconciled Because now we need to match out the transaction So if I go to the reconcile tab I should be able to find that one And just say there it is It's green, it's identified it And so we can just match it out It's a match, no problem It's not going to record anything new It's just going to match it out So we'll just say okay, boom Now, so you could do it the other way Now I'm on the credit card This is another payment that should be on both sides So I could just say why don't I do it from the credit card side Now I normally wouldn't do it from the credit card side Because usually I think most people think Of payments coming from their checking account To pay off, pay down the credit card So I think that's probably the flow Most people would do But just note that you could do it the other way I could say this is a transfer To the checking account And so this is a payment So it's going to pay down the credit card Which means it's going It's kind of a transfer to the credit card To pay down the credit card, right And then it's going out of the checking account So let's just say transfer or payment We'll just say and do it this way So let's go ahead and record that Boom, shaka laka And then we're going to go back to the balance sheet And then if I go into my checking account And let's do that filtering trick again Because that was fancy And fancy is good Unless it's fancy, pansy Because I don't like when the pants are too fancy But fancy on the filtering Fancy filters is good So let's go into the bank transfers And then into that And then there it is, fancy Fancy filters, fancy filters Alright, then back up And then let's go to the credit card side of things If we may Down to the credit card Checking out what's going on with the credit card What's happening What's happening with the credit card We have another payment down here Paying down So that looks normal Looks good Alright, let's do the last one Let's just do it the normal way again So we saw the two main ways you could do it When you're dealing with these bank feed to bank feed transactions But I think normally If you're trying to come up with a system Most people are going to be going from the credit cards I mean from the checking account side of things To the credit card side of things They're going to go into their checking account And try to be reconciling stuff And when they see a credit card payment They're going to record it on this side first So there it is Now this one This one needs to be verified Okay, let's finish that process We entered it on the credit card side We have not yet entered it on The checking account side Or we entered it, but we haven't matched it In other words, let me just do the same thing I did with the credit card If I go to the account transactions over here Notice we have We're basically constructing our books from The bank feeds But we have this Credit card transaction That came through And it's unreconciled We didn't make that ourselves We made that from the bank feeds On the credit card side of things So now we can match that out So I'm going to go match it out It's not going to record anything new It's just going to verify Helping us with our bank reconciliation Now I think I had one more On the credit card Payments So let's just do the last one To complete It will now be complete The cycle is now complete Alright, so we're going to go There's another one Paying off the credit card So we're just going to say This is transfer Transfer And I'm just going to call it a payment again Payment Credit card And let's go ahead and record it That will record it and reconcile And then on the other side Let's just finish it before we check it out On the financials We'll drop it down To the bank accounts again And go into the credit card Side of things And on this side we can see On the credit card Is this the credit card? Yeah, we have I was looking at the 99 That's why it was throwing me off The 3096 un-reconciled That we need to reconcile So I'm going to go back into the reconcile side And we just see it, boom, that's the last one Last bit, get every piece of enjoyment You can click in that button Because you don't get to click another blue button Until you spend more money So, boom See most people like spending money To buy stuff But I like to see it come through The zero accounting system And click the blue button That's why I do it Anyways, let's go back into the balance sheet And let's go into The checking account and check out The transfer again And We'll go into this Fancy filters Down to the source And bank transfer So there's our bank transfers Looking Looking good That's that last one, I think And then if I go back And we go into our credit card We're going to say, let's go on Down To the credit card It's gone Is it gone? It is gone I see why It's not gone Zero put it up top here The cash account, so I'll talk about that in a second If I go into it though We could see the same thing here We could say There's the The payments have been made Looks good, okay, going back up Now you might say, why does zero keep doing this? They did this to us with the checking account They put the checking account Down at the bottom Like in the liabilities before And now they put the credit card up top And I've worked with other accounting software And the other accounting software doesn't do that Like if you work with like a QuickBooks online For example, it doesn't move It never moves, I don't believe I'm almost positive It will never move the checking account to a liability Right, it doesn't move the credit card To a debit But actually, that's the right thing to do From a reporting standpoint Because like when we saw the credit card Go into a liability It switched from An asset to a liability To an asset, same thing happened with the credit card At this time So zero is actually doing the more proper thing It could be a little bit, I could see why Maybe QuickBooks didn't do that I think it might have just been a coding thing at first Because it's easier to lock it in place And not do that, I don't know But It's also a little confusing to people When they're looking for it and they're like, it flipped But it actually is more Proper from a reporting standpoint So I kind of think it's a good thing actually That it's like that here And then you can still find it on the trial balance But the thing that's happened here Is we overpaid our credit card So we overpaid So now the credit card owes us money We have a credit balance We would call it a debit balance Now this is where it gets another thing It's kind of funny When you deal with credit card companies Or any time you're dealing with a vendor This concept of debits And credits gets mixed up And people start to Use it as shorthand For example If the credit card company If I called the credit card company And they said, oh you overpaid And you have a credit balance In your account of 99.05 That would basically mean That they owe us money We could spend the money on it It's a decrease when you're talking to them Because on their side of things A credit balance Usually you are an accounts receivable To them, you're an asset to them Because you owe them money So if they credit your account They're lowering the balance On their side But on our side It's the opposite Because we're on the other side of the table So to us When we record the credits as a liability When we pay for things And we take into a charge Of budgeting our liability account Which is a bad thing On our side, right? Because it's our books Not their books And right now we overpaid We overpaid And therefore we have a debit Higher than the credit Which doesn't usually happen in a credit card And that's why it flipped from a liability To an asset up here And so we have a debit balance To us of 99.05 Which is good Because we've overpaid And so they owe us money If I called the credit card company They'd also say it's good That you have 99.05 But they'd say you have a credit balance in the account Because it's on their side of the books Which is that's bad for them It's a liability to them Because that means they owe us So on their side of things Their asset of us owing them money Would have flipped to a liability I just had to point that out because It uses people often times But You might ask why do I have A 99.05 balance Because I paid off the entire thing That's how much they said I owed We have that possibly because we need to Adjust the beginning balances We've only been entering the transactions That have happened During the time frame And if we had the credit card Before we started entering transactions Then we're going to have that beginning Balance issue Same thing with the checking account When we first reconcile We're going to have this beginning balance issue So we'll deal with those In future presentations on both the credit card And then the checking account side of things And we kind of think about that Possibly when you do your bank reconciliation And one more thing to note As I do this you might be saying I'm reconciled now I have reconciled because I checked everything off Well you haven't reconciled yet We're doing the reconciling Kind of process But the reconciliation Is the actual report That's supposed to be tying out the difference As of a point in time Between the bank balance and the book balance And if it's still off Then we still have a problem So this should If everything's going perfectly Then we would be done And we would be reconciled here But this isn't really a reconciliation This is the process of reconciling And we're not there yet So we'll get there We'll talk about that beginning balance issue Later once we fix that Beginning balance issue Then doing this process for the credit cards Should pretty much all the time Get us to being reconciled Because we're basically constructing our books directly From the bank feeds with the credit cards Which may not always be the case With the checking account Okay