 QuickBooks Online 2024 Accounting Process and Forms Overview Get ready and relax because it's so easy using QuickBooks Online you'd think it'd be a crime. But it's not. Unless you're doing bookkeeping for bad stuff or something. But what, let's get into it. Here we are online in our browser searching for QuickBooks Online Test Drive, the primary tool we'll be using for the first part of the course looking for the results that have Intuit.com in the URL Intuit being the owner of QuickBooks Online We'll be using the United States version and verify that we're not a robot. So here we are in the sample company file. We're going to duplicate some tabs like we're going to do every time right clicking on that tab up top. We want to duplicate it so we can put our reports in it. As it's thinking I'm going to right click and duplicate it again. And then as that's thinking I'm going to go to the middle tab down to the reports on the left. Open up one of the favorites that being the balance sheet. And then I'm going to tab to the right and go to the reports on the left. And this time open up one of the favorites the profit and loss or income statements sometimes called the P&L. That's the setup process we do every time. Let's go back to the first tab. So we've gone over a quick navigation of how the QuickBooks System works. We're to find certain things. Now we want to give an overview of the accounting cycle, the accounting process. Now when we set up a new company file you have certain elements in the setup process that of course aren't things that are going to happen on a typical cyclical cyclical type of method. So if you're a bookkeeper that sets up multiple company files and works with different clients then the setup process is often one of the more difficult types of processes and the one that is basically unique to the whole system. Once set up then you're going to do the day to day type of accounting processes and the month to month the cyclical type of things. If you're going to work somewhere else in an accounting office then you're typically going to be diving into a system that has already been set up. So you're not going to need to set up a new company file and do all that first time stuff. Your goal is to deconstruct the cyclical items that have been happening over time to see if you can replicate them making things run smoothly going forward and possibly make improvements usually going to be incremental improvements as you go forward. 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 that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our trust me I'm an accountant product line. Yeah it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com So let's go the first let's just think about the goals of the accounting process what are we trying to do when we're doing our bookkeeping here there's two primary goals we might categorize them into at least one is the creation of the financial statements that's one goal the other goal is to facilitate transactions as seamlessly as possible. Now the first goal the creation of the financial statements primarily being the balance sheet and the income statement. This is the end result this is what we're trying to create this is what all the forms are entering into the system so that we can build these primary financial statement forms and related reports all other reports typically tying in to one or multiple line items on these major financial statement reports these reports being useful of course because one if you're small business then you might just primarily be using them for the obligation of tax preparation at least in the United States so we might be using them to comply with our tax obligations of our income taxes and you're going to at least need an income statement in order to do that we also would use these reports for our internal purposes to manage our business to see how well we are doing these will be the primary tools for that and then we might have external users that might need these reports as well we might need a loan or something like that provide the reports to the bank and and those types of things that we could use the financial reports for but in the United States everybody's going to need some type of financial report at least for the tax preparation part of it now the other goal with the facilitating of the transactions that means that I'm going to go back to the first tab that all the people that you're dealing with customers and you're dealing with employees and you're dealing with vendors the people that pay you the people that you pay and the people that you pay the employees as well you would like to facilitate the transactions so that they run as smoothly as possible possibly automated if possible so that the account so that the accounting process is as minimal as it can be while doing everything it needs to do so that the business people the owners of the business possibly you as the owner of the business can then focus on whatever you do in other words if you if you sell guitars then you want to be focused in on how you can increase the sales of guitars not focusing all your time and all your attention on the bookkeeping process so we would like to be as bookkeepers in a way in a system that we're making things as seamless as possible and interacting with it with our transactions with our vendors customers employees as smoothly as possible in a way that it's going to be fast and also that we're not creating problems or angering you know the vendors and the employees and the and the customers in any way by how you know how how things are going to be set up so those are going to be our major objectives from simply the bookkeeping side of things so let's go through the general process if you were to set up a new company file would be that you're going to first you know set up the company file with QuickBooks and then once that is set up you're going to have to then set up the the underlying foundational items which you can often think of as under this cog under the lists so the lists you'll recall is kind of an accounting term but it's kind of specific to QuickBooks as well because some of the primary lists used to be housed under the drop down of lists and the old desktop version so one of the main things that you'll have under the list if I go into the lists is the chart of accounts you could find the chart of accounts elsewhere as well but but I'm just looking at the lists because these are the primary you know set up things to have to set up so the chart of accounts you will usually be given a default chart of accounts by QuickBooks if you just set up a new company file but it's it's usually got way too much stuff in it and so you might want to trim it down or hone it down over time we'll talk more about how to do that and the second part of of the course when we get into creating a new company file from scratch but the in essence the chart of accounts you have to have it because these are the accounts that are being used to create the financial statements the balance sheet and the income statement so these are the accounts that the transactions are being assigned to whenever we enter a form like an invoice or a received payment now if you're starting if you're jumping into a company file that's already been set up then of course the chart of accounts hopefully is set up properly you're not going to be adding and subtracting accounts all the time once it has been established you want consistency once it's been established and you're going to try to use the same accounts as it goes if I go to the drop down again let's go back into our lists and so we have the recurring transactions these are things that could make it a little bit easier if you have recurring transactions you could set them up we might have a section on them in and of themselves later the products and services however is another big one that needs to be a foundational item set up before you can properly enter forms often times so the products and services are the things that you're that you're selling whether they be services like landscaping service the work that you're doing bookkeeping or products like you're selling guitars or something like that you have to have those in place because if I hit the drop down up here and I start to do my data input like invoices or expense forms or bills then I would need to have I need to have a product and surface or service to choose from so once those are set up most businesses have their own products have a set thing that they do or sell and and it'll be easy going forward but you have that's an underlying thing that basically needs to be set up beforehand so then we've got our custom form styles so you could adjust your invoices for example to put your logo on it and that kind of stuff some more other formatting is more important possibly to the forms for data input some of the form customization in other words is just for looks to put your logo on it some of it might be adding fields that will actually have an impact on the financial statements payment methods so you you might if you're going to be accepting credit cards or something like that then you you might have to set up or adjust the way the payments methods are going to be facilitated again once you have that set up it should be easy going forward that would be a set up kind of process thing and then the terms display the terms that determine the due dates that would be something like on your invoices if you invoice a client for example then the question is how long do they have before they have to pay you do they have 15 days 10 days 30 days and so we can set different terms here attachments you could display attachments if you're using tags then tags is kind of like similar to class tracking it's another system that you can use to track your your mainly your income statement by by by tags we might we might have a section just on tags in general so you can look at that but it's just kind of a special area and then custom fields another thing that again if you're using custom fields possibly so that it makes it easier to search for data input once entered you want to set that up upfront and then and then it'll be set up and you'll be good to go going forward now once all that is set up and you have all your lists set up I'll go back to the dashboard then you're going to be in the part of the accounting process where everything should be somewhat cyclical which would be a similar process that if you were going to work for a company which has already their accounting system set up that would probably be where you're at in other words if I hit the drop down here as we saw before we have the different cycles customer cycle vendor cycle employee cycle if you work at a larger company it's likely that you're going to have a very much more detailed and complex things to do but also a limitation in terms of how many things you are involved in so in other words I you might be working just in the customer cycle in accounts receivable for example for a larger company or you might just be on the vendor cycle for accounts payable or you might just be doing payroll within a company if on the other hand you're a bookkeeper you work for smaller businesses the complexity of everything that you're doing will be less in in each of the categories but you're going to be doing everything right in that case you'd be doing all you know you might be working on the whole thing if you're of course doing the bookkeeping process and then all this kind of stuff of course would be a cyclical type of process so if I'm on the customer cycle what would typically happen well it depends if we're on a cruel basis or in a cash based system but as we saw a little bit on the bank feeds we're going to basically this is going to be the QuickBooks desktop flow chart again but it's going to mirror the cycle of the forms that we're going to be using in basically any accounting system breaking out the cycles the vendor cycle the customer cycle and the employee cycle so if you're working within a company and the normal accounting process then you're going to be looking at each of these cycles on the vendor cycle that's the money that ultimately goes out where you might just be entering check forms or expense form electronic payment type forms or you might be entering bills and then tracking the accounts payable paying off the bills on the customer cycle side of things then if you have a very easy process you might just be recording the deposits as they come through something like a gig work but you might be on a cash based system where you have to record the sales receipts possibly and then track them and make the deposit of them or if you're on the accrual cycle you can create the invoice receive payments and record deposit and then on the employees side of things then you're going to have to process the payroll which will record the payroll expenses and liabilities and then you have to pay off the liabilities so you can from an internal bookkeeping standpoint you can access the forms that would be used here in this drop down and then and that would be the data input side of things which would actually record the transactions and that the each of these forms will make a journal entry almost all of them like an estimate is an internal form that doesn't have a journal entry but most of them will create a journal entry meaning they will have an impact on the financial statements the balance sheet and the income statement at least two accounts will be affected for every transaction that we make every data input form that we create and then to facilitate our communication with the vendors the customers and the employees we usually do that in the centers so when I'm dealing with customers I would then go into the customer center here and we would usually be going if I had a common communication with them I can go into that particular customer and I can say okay this is this is whatever this person here and then we can we can see what has happened not a whole lot of activity down here and we can answer their questions right I can go back to my customers now on the customer side I think this one has an amount let's just go into Amy's here so we're so here we have a lot of activity that is happening so if there were questions about a particular invoice or have they paid something and so on this is where we can go and we can basically see the activity and hopefully be able to communicate with our customers that being another one of our bookkeeping objectives to try to keep the people that are paying us happy at least from our end by making sure that the transactions that are being facilitated are being facilitated smoothly so we can you know see the transactions here we can send out our statements and so forth we'll dive into this center in more detail later but this is where we're tracking the accounts payable for the invoices that have already been sent out which is going to be really important if you're on an accrual based system some businesses it's not as important right because if you if you just have if you just doing one time one off sales to people and like a Shopify store or something like that then you probably don't need to I don't need all of the customer information I probably just would like to have them on my newsletter or something because I'm not tracking the accounts receivable they already paid me and it may not be likely that they're going to have another repeat transaction from me right but if I'm tracking accounts receivable and if I'm in a type of business where I have repeat customers then my communication with the customers becomes quite important and then on the expense side of things when I enter bills and whatnot that's in the expenses or what I would say the vendor center and you can go to the to the vendors over here so the vendors similarly for small businesses oftentimes might not be as important to track this information if you're in a system where you're paying the vendors as the bills come up either with a credit card or cash bills come up you paid the utility bill you paid the gas bill you paid the telephone you don't you paid the rent even you don't really need to have a lot of communication with these companies as long as you're just paying them as it comes up however once you start tracking accounts payable then it becomes more important because now like with the accounts receivable side on the accounts payable you want to make sure that you're doing your cash management to pay them as late as possible possibly for cash management strategy without making them angry at you at that which is difficult right so there's a contradictory kind of motives there and usually larger companies are companies that have that accounts payable but also if you're dealing with vendors that are your primary vendors that you purchase from all the time then clearly you want to make sure that you're facilitating the transactions as smoothly as possible and you can track them each of the the vendors in here so I can go into the vendors I can see the bills and the payments of those bills and then if you deal with employees payrolls its own kind of issue but once we would be processing the employees down here so they got the two employees that would be set up we can have multiple ways that we can set up payroll possibly in the system or we can have an external provider like an ADP or a paychecks but if we're running it within QuickBooks then of course we can make sure that the payroll is going out smoothly which is a whole thing in and of itself will touch on in future presentations now the first half of the course we're going to imagine that we are in a system where we're jumping into a system that's already been set up which is this company file so meaning this is the sample company file that already has data within it similar to as if you went to work for a company that already had data within it in that case we're trying to deconstruct what has already happened and then in the second half of the course once we have an understanding of how the process works we'll go into try to create those foundational kind of things such as we saw under the lists up top such as the chart of accounts the items lists the products lists now as we go through this first half of the course we can actually kind of see those foundational things by by basically like auditing them in essence going from the end result and drilling back down in other words we can go to the financial statements over here and we can say okay this checking account has one thousand two oh one in it if I click on it what is included in that checking account and I can I can let's close the hamburger over here you can see the types of forms we've got deposit forms we've got the bill payments we've got the expense forms now the checking accounts going to look chaotic because there's more types of forms in the checking account than any other type of account but the point is that you can actually drill down by clicking on this expense form for example which will take you to the source document so now see how I'm deconstructing I'm going from the end result and I'm drilling back down to how the end result was made and now I can look at the source document and say okay this looks this was put in place here here's the category this is the account that must be in the chart of accounts right in order to have that account here I can't get my list from here but it must be in the chart of accounts let's go here under my lists it's got to be in the chart of accounts in order for me to apply it here so we're kind of we're seeing how everything is built by basically deconstructing the engine so I'm going to close this back up and I'm going to go back if I looked at the income statement for example you can see that on the income is usually going to be a little bit easier to see although still confusing here because they have a job cost system example but if I go into here you can see the detail and here are invoices you don't have as much chaos going on as we did with checking account which has different a lot of different types of forms that are applied to it because cash is the lifeblood of the company and here you would expect to see invoices and sales receipts that's about it unless you have like a really simple system where you're using deposit the deposit as your income recording form I can drill down here and I can go back to that invoice and then then I can see the invoice here and I can receive the payment everything's kind of connected I can see the payment that was made on the invoice so I'm going to close this back out and say do you want to leave without saving yes and then back to my forms and so that's and so that's going to be the primary method will do for the first half of the course will go through each of these cycles customer cycle vendor cycle employee cycle will analyze each of these forms will look at the impact of the data input of those forms on the financial statements deconstruct from the financial statements back to the forms and as we do that will also get some understanding of these fundamental items that must have already been set up in order for us to do that data input such as the chart of accounts such as the products and services and then in the second half of the course you want to start a new company file from scratch so that we can then apply the foundational items that we need to make the company run smoothly meaning like the chart of accounts the products and services the terms you know and all that kind of stuff