 QuickBooks Online 2023. Generate reports after entering beginning balances. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our Get Great Guitars practice file. We started up in a prior presentation using the 30-day free trial. We also have opened the sample company. If you 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. Want these to open at the same time? We suggest using the incognito window or another browser to open an incognito window. If you have Google Chrome, you can select the three dots in the browser and then the new incognito window. Then search for QuickBooks Online Test Drive. We'll be using the sample company to look at the differences between the accountant view, the view that get great guitars is in, and the business view, the view the sample company will be in. If you want to switch between the two views, you could go to the cog dropdown up top and switch the view down below. In prior presentations, we have set up the company file. We looked at some of the preferences located in the cog up top. We looked at the general ledger and we added our beginning balances imagining that we had a prior accounting system that we wanted to pull over the beginning balances into the current accounting system and then start printing reports going forward for the period of January 1st, 2023. So now let's just take a quick look at our financial statement reports and how those reports have been constructed thus far. So we can then think about what the construction of reports will look like as we add new data going forward. So we'll open up the major financial statement reports by right clicking on the tab up top to duplicate the tab. And then I'm going to duplicate another tab to put the balance sheet and income statement up top. So I'm going to right click again and duplicate again. And then as the tab to the right is thinking, I'm going to go to the tab to the left. We're going to do this basically every time going forward. We're going to go to the reports on the left hand side. And then I'm going to open up the balance sheet, which will pretty much always be in the favorite reports. Note that if you're in the business view, then the reports are located in the business overview tab and then the reports on the left hand side. So then I'm going to go to the tab to the right and then down to the reports again on the left. And this time open up the profit and loss otherwise known as the income statement or the P and L. I'm going to close the hamburger up top. I'm going to run this report for 2022 at this point. So I'm going to go from 010122 to 123122 and run it. So we'll run that report and then I'm going to tab to the left, close up the hamburger, scroll up and run the report. This is going to go from 010122 to 123122 and run it to refresh it. We're going to start doing that setup every time because we want to think about the financial statement reports as we do the normal data input into the system. Now this balance sheet we saw in a prior presentation ties out as we wanted it to. So the plan has worked that this was the prior balances that we imagined were from the prior accounting system that we were using up until December 31st of 2022. We entered this data into the system as of the end of 123122 so that we can add new data in January 1st, 2023. The strategy we used you'll recall was to enter each of these transactions or each of these balances at a time instead of with one giant journal entry. So we can also provide the information necessary for the sub ledgers such as for the accounts receivable sub ledger by customer inventory sub ledger by item inventory item and payable sub ledger by vendor for example. And so we have those beginning balances into the system and then from this point going forward we're going to start to think about how the balance sheet is going to be created as we do each financial transaction. This is why we'll typically have I will open up our balance sheet and income statement the major financial statement reports all other reports basically given more information or more detail about one or multiple line items on these reports. I'll have them open on the right and then I'll usually do my data input on the left every time I add a new data input with the plus button for example. I will then refresh and run the balance sheet and the income statement and see if the impact on them is what kind of I expected that way you get a real good understanding of the accounting process because you could see what the end result is as you do the data input. So let's take some time now here to just look at the accounts that we have and what we would expect the data input to do as we do data input going forward. Just a quick recap of the process when we're when we're setting up a new company file. Remember what our objective is the business objectives revenue generation. Our objective as the bookkeepers or the accountant department is to facilitate the financial transactions record the financial transactions so that we can create the financial statements balance sheet income statement and related reports as efficiently as possible. So the business can spend most of its time doing whatever it does to make revenue and not worry too much or spend as little time as possible just in the transactional data input of entering the transactions to create the financial statements. The financial statements then being used at the end of the period for taxes at the least if you're in the United States and then also for other reporting requirements possibly as well. And then we also want to be able to facilitate the discussions with who we do business with customers vendors and employees to be able to facilitate our transactions as smoothly as possible as well. So that's kind of like our goal to do that we set up the company file we looked at our preferences some of which are under the your company preferences and under the cog on the left. We then entered our beginning balances which you may not need if you're starting a brand new file for a company that's a brand new company. But oftentimes you're you're you're setting up the QuickBooks file for a business that's already been in place. So we set up our beginning balances and then the next step of course and we then set up our service items on the left hand side. So you recall on the left we set up our items which are in the sales products and services. If you were under the the business tab it wouldn't be in the get paid and paid area products and services in order to help us to both enter the beginning balances for inventory and to allow us to enter invoices and sales receipts for the inventory purchase was we made. And we also set up the tax information necessary for the sales taxes also helping us to then facilitate the data input on the forms as easily as possible. And then we set up our payroll information which should help us to process the payroll as easy as possible. Now that we have most of the stuff set up I'm going to go back to the dashboard. We're just going to enter the data input at this point in time. So we're going to be doing the data input which is normally done with the plus button and we'll actually generate these forms by cycle customer cycle vendor cycle employee cycle. These forms are what are going to be used in order to generate the financial statements. I closed up the report again because I worked in the wrong tab. So I'm going to open up the balance sheet again. Change the date 010122 to 123122. So now let's think about these accounts that we have right here and how they will be impacted when we do the data input. So if I go to the balance sheet for example the cash account is the account that has most things happening to it. Because remember that every cycle that we're in vendor cycle money going out for goods and services we purchase customer cycle money ultimately coming in for things that we are selling goods and services that we're providing and employees money going out cash is in each of those cycles. So the cash is kind of the lifeblood of the company. Therefore if I go into the detail for cash we're going to start to have a whole bunch of different transactions in here that are relating to different cycles. So if I hit the plus button up top we would expect for example on the customer cycle when we invoice there's no cash related. But when I receive payment or when I make the deposit then that's going to hit the checking account and we'll see an increase of the checking account. So nothing with an estimate to cash credit memo possibly in the returns on the returns we could have cash effectively have to reverse on the vendor side. Expense forms will decrease cash check forms will decrease cash and then the pay bill forms will decrease cash. And obviously when we pay the employees that will decrease cash the deposit hopefully happening at some point at the end of the customer cycle will increase cash. So those are the forms that day to day type of forms we would expect to be entering that would be flowing through the cash. There's also some other ones when we pay the sales tax and stuff we could have special kind of checks they're basically check forms that we'll get into. And then we've got the accounts receivable. Now notice that every other account that we look at is going to have far less variance in terms of the types of transactions that will be impacting them. Accounts receivable is only going to go up when we enter an invoice and we'll only enter an invoice if we're in the type of business where we do the work first and then we get paid. So if I look at my cycle over here customer cycle you could have multiple types of business you might just get paid by gig work and you just get paid by YouTube. Well in that case you might wait till it clears the bank feeds even and just record it with a deposit and if that's the case you're not going to have accounts receivable. Or you might have a check register where you get paid at the same point such as with a food truck or restaurant or a cash register situation of some kind in which case you won't have accounts receivable. But if you're a bookkeeper or something like that or if you are a law firm or landscaper often you do the work and then build a client then have to collect the money and then make the deposit. So the accounts receivable is only there if you're on an accrual basis it's an accrual account for having to collect the receivables. Now if I go into the receivables notice even though we just entered the beginning balances it used an invoice to enter it. So the transaction types we expect to be impacting the accounts receivable will only be invoices that will increase it and then receive payments that will decrease it. That is it right. That's all we expect to really have happening there. Let's go. Let's go back. Now we also have a sub ledger for accounts receivable. I'm going to go to the tab to the right. I'm going to right click on it. Duplicate the tab and then I'm going to go to the reports on the left hand side and then let's close this up and go down to the reports. It says who owes you the accounts receivable aging detail or let's do the summary aging summary is a common report related to the receivables. If I make that as of whatever twelve thirty one two two and run it. Notice it's breaking it out by customer. So twenty thousand five hundred that ties out to what's over here twenty thousand five hundred. We also have to track that information and most likely will do internally. If I go to the tab to the left in the sales area and then we can track by customer right. We can track by customer here and go into our customer detail and look at who owes us money and collect on them. If you're in the business view by the way then that would be into the get paid and paid area get paid area and the customers. So there it is under under that view. Okay let's go back to the to the balance sheet. Then we've got the inventory account which would only be there. If you sell inventory then it'll be in it'll be in the system. And then you got to think do I have a perpetual inventory system or a periodic inventory system. I won't go into that in a lot of detail because we talked about it in the past. But the periodic inventory system would be you're not tracking the units of inventory but just the dollar amount which you will adjust periodically. And let's just now that we have the report let's kind of think about how that would work. If you had a if you had a periodic inventory system then if I was to go to the plus button up top when you buy the inventory you might have you would be in the vendor cycle. You might have a purchase order but you might just buy it with it with a bill or expense form or check form money going out for the purchase of inventory. And then if I go into the expense form for example to purchase inventory. Then then when you when you purchase the inventory then you might just record it basically to the inventory account and possibly not be tracking the the item which is going to be tracking the item by by unit as well. If you were on a periodic inventory system if you're on a perpetual inventory system then you'd be down here in tracking the items you'd have to set up the items. If you were just purchasing the inventory on a periodic inventory system you might just record the category to inventory. The difference between these two methods is this will still record the same dollar amount but it will not track the sub ledger by item which you would be tracking. Possibly on an Excel worksheet if you're using a periodic inventory system if you're using the items down here then you're going to track not only the amount but also the item which now has been listed in the quantity will be adjusted in the sub ledger. So if I close this back out I say do you want to leave I'm going to say yes let's go to the tab to the right and open the sub ledger report of inventory right clicking and duplicate this tab. And then go down to the reports on the left hand side and I'm just going to type in inventory inventory valuation summary let's look at it date let's make it 1231 222 and run it. So this gives us the units of inventory which would only be here if we're using a perpetual inventory system a periodic system would not have this year notice that this dollar amount ties out to what's on the balance sheet. Which we can see here if it was a periodic system then when we made the sale which we would make with an invoice or a sales receipt then again we wouldn't record the the cost of goods sold we would make the sales with like a sales item which would just record the sales side of things. And then periodically we can use our Excel worksheet to figure out the cost of goods sold by thinking about what we sold we can count the units and use our cost of goods sold equation. Beginning inventory plus purchases minus ending inventory so that we can then do a journal entry lowering the dollar amount and recording the related the related cost of goods sold which would be on the income statement. So that would be a periodic kind of system if it was a perpetual inventory system then. If I hit the plus button when we make the purchase as we looked at we would be recording the increase and then when we make the sales item the invoice or the sales receipt you can't make it with a deposit because it won't do it properly. So if you have an invoice and a sales receipt it'll decrease the dollar amount of inventory record the cost of goods sold properly as well as decrease the units of inventory on a perpetual basis. So we're setting up the perpetual basis because that's the most complex within the QuickBooks system but realize that you could set up other systems that would be appropriate. I think then if I look at the types of transactions in the inventory account it would go up when we purchase with a bill. So the types of transactions would be bills or a expense form or check form and it would go down with a sales type transaction invoices sales receipts. Those are the only kind of forms that we would typically see in the detail of the inventory account as well as an inventory adjustment form to adjust to a physical count from time to time. And then the fixed assets these are going to be property planting equipment. So this would be related to us purchasing this account right here purchasing property planting equipment which we might do with a loan. So it gets it's not a normal transaction because we don't purchase property planting equipment every day. Therefore if I hit the plus button there's no actual form like even in the vendor section for the purchase of property planting equipment per se. Because you might say well there's an expense form that's true but normally we're going to if cash is affected we'll use an expense form or a check form. But we might finance the property planting equipment and because we don't meaning we're going to get a loan for it and because we don't do that all the time. It's not an everyday thing that we buy a big piece of equipment or a building. There's no form that's related to it directly so we might then default to a journal entry if cash is not affected. So the property planting equipment we would expect not to have a lot of activity like we do have in the cash account. Cash will have the most activity depending on the kind of business. These accounts might have a significant amount from day to day the furniture and fixture we would expect to have very little activity a lot of little action over the entire year. Not a lot a little action just a little action in terms of the number of transactions with big dollar amounts possibly. So those would be purchases and disposals accumulated depreciation relates to us depreciating the property planting equipment which oftentimes will be dependent on depreciation schedules that are maintained outside of QuickBooks possibly with your tax software which oftentimes can utilize or create both book depreciation schedules and tax depreciation schedules. We'll talk more about them later but again these are these accounts aren't something that should see activity in on a routine day to day basis their periodic activities. The accounts payable will typically have a increase with a bill and a decrease when we pay the bill. So if I hit the plus button I would expect accounts payable to go up when we enter a bill only bills having a specific terminology with QuickBooks. Meaning there's something not just that a vendor charged us that the telephone company gave us a bill we could just pay it with an expense form and not enter a bill. If we enter it as a bill that means we're going to increase the accounts payable and pay the bill with a pay bill form which is a type of check form in essence at a future presentation. So a lot of small companies might not have accounts payable because they might just pay all their bills with an electronic transfer either credit card or checking as they come up. As companies get larger they often want to track their accounts payable more closely because they want to have more strict cash management strategies paying their bills as late as possible becoming more significant as dollar amounts increase and as the number of transactions increase. So like with the accounts receivable we have a sub ledger tracking the accounts payable by vendor and you also have your vendor center. I'll see on the left hand side which is under the expenses tab and vendors helping us to facilitate transactions with our vendors. If you're under the business view by the way then it's going to be in the get paid and paid area and your vendors center is down below. So there is that one and then the credit card. So this by this one will only go up like we said with a with a bill form and go down when we pay the bill right. That's the only transactions we expect to have in this account basically and then the loan of visa account is kind of like the cash account because it could have a whole lot of transactions in it. Because it's a financial institution type of account that you can connect to the bank feeds. So instead of paying with everything with cash you might be paying for a lot of transactions with the check with the credit card in some instances. In which case you might have a whole lot of activity in here related to it but you would expect them to all be like credit card forms or expense type of forms paying with a credit card for those transactions. And then you would pay it down when you make a payment from from the checking account which you could do in multiple different ways. We'll talk more about that later. But and then we got the loan payment which what would we expect happening here. Well we would expect the loan payment to go up when we take out the loan and then we would expect it to be going down with an expense form. Or with an expense form or check form typically because we're just going to be paying down possibly month payments monthly payments on the loans. That's all we would really expect to be happening here with possibly an adjusting entry at the end of the period as well. And then in the equity you don't usually post anything to the equity accounts unless it's draws draws meaning you're taking money out for personal purposes. Or if you put money in to to finance the business then you might post something to equity. Otherwise equity is is what is closed out from the income statement into the equity section as you can see here with net income. And then on the income statement side of things we've got revenue and expenses revenue. We expect to be going up typically with an invoice form or sales receipt forms and expenses. We expect to be going up with an expense form a check form or bill form. Typically those are the things that we expect to see their cost of goods sold will specifically be related to inventory. If you sell inventory and it will be impacted if using a perpetual inventory system when entering an invoice that sells inventory. And you're using a perpetual inventory system or a sales receipts. So as we start to enter these transactions will go back and forth between the forms and the data input to see the further building of our financial statements as we add new data to it. Now the other big form that's that's useful is the trial balance. I'm going to right click on the on the tab to the right and duplicate it. And the trial balance is not something that many people are used to. But I think it it can be a substitute for having two reports open. So let's look at it. It's called a trial balance trial balance. And I'm going to change the date up top. So from 0 1 0 1 2 2 to 12 3 1 2 2 and run it. So you'll recall that we looked at this before. But I just want to point out going forward that this is basically the balance sheet on top of the income statement. So you got your balance sheet accounts cash accounts receivable inventory accumulated depreciation furniture and fixture and then your liabilities which start with a credit over here. This is a credit because it's a contra asset and then and then your loan payable and then your equity and then your income accounts down below. The trial balance is quite useful because it gives you a snapshot. Notice we don't have a lot going on and even if I have my balance sheet and income statement open. I still have to scroll through a lot of stuff and I've got all these subcategories down here here and then here and that's just with the beginning balance I've entered. If I if I only have the trial balance open even if I don't really understand the debits and credits. I can I can see that this is just a list of accounts with the balance sheet accounts on top of the income statement accounts. And if I run it on a year to date basis it gets a little walkie on the income statement side if you try to run it for like just one month of December if you run it for the year to date. Whatever the date is then it works quite well and you can use it to kind of check your numbers right so I can go into here and if I want to see what happened on the cash I can drill down on the cash. If I wanted to see what happened on the services I can scroll down and find that you know pretty quickly without all the subtotals and whatnot. So oftentimes what I'm working in practice I'll have this report open instead of the balance sheet and the income statement so that I can just have one other tab. As I do data input I can come over here refresh it and drill down on the data input a little bit more easily. So you'll recall that here we got the service accounts these are the these are the income statement accounts. Those will roll out to equity. So if I go from 0 1 0 1 2 3 to 12 31 2 3 and run it. Now we only have those balance sheet accounts nothing's on the income statement for 2023 which is the first period of entering data into the current system that isn't just the beginning balance data. So going forward that's what we'll do we'll see the impact on the balance sheet and we'll create the income statement from scratch from nothing. Remember that the income statement or the profit and loss the P&L is what's typically used for most small businesses. The main report needed for income taxes because we have an income tax so we're going to be using the income statement and that closes out at the end of each year to to the equity section. So we're starting that's why we're starting with just balance sheet accounts will have income statement accounts going forward. We'll try to run this at the end of each period so that you can check your numbers. This is where we're starting out with in our practice problem going from this point.