 Now we've entered the beginning balances and we've entered one month of data input. Now let's just think about what has been created in terms of the end result. This is kind of like an auditing process, right? When we make the books, when we enter the data as we add the forms, that's like the bookkeeping accounting process. And then when you go to the end result and drill back down to the source document, you're kind of doing more of an audit type of technique. But it would be similar to putting an engine together and then taking it back apart. So now that we've added the information into the system for one month of data, let's think about these two reports and then also how we might be grouping these reports if we want to provide them to say a client or a supervisor on primarily thinking a client here. So clearly the two main reports that we're thinking about are the financial statement reports, that being the balance sheet and the income statement. And then we have the subsidiary reports, most of which are giving more information about one or multiple line items in these two main reports. So let's just go through the balance sheet and think about how they've been put together thus far. So if we go through our balance sheet, we've got the assets, liabilities and equities, that's going to be the accounting equation. And within the assets, let's just close everything up and we'll kind of open everything as we go to analyze these major super important reports. So we've got the assets, that's what the company owns. Notice you can kind of think about the assets as an investment because the whole reason they're in the business file and not in your personal investments is because you're gonna use those assets like property, plants and equipment, for example, to help you to generate revenue. And we think we can generate more revenue in the business than we could if we just put the money into the bank and get interest or in stocks and bonds. So the assets are kind of like an investment to that in that sense. Within the assets, we got current assets and fixed assets, these are common, just financial statements categories. And these have been put together just in terms of financial statement classifications. If I open that up, then we have the account types. Notice that these two arrows, these three arrows are being constructed. If I go to the tab to the left and then go down to the accounting down below, accounting and then the chart of accounts. And if you're in the business view, by the way, it would be in the bookkeeping, the bookkeeping and then the chart of accounts. So if you're in the chart of accounts, you can see the account types, it's sorted by account types, bank accounts and then accounts receivable and then other current assets. That's how it's being constructed. So every time we enter something into a bank account type, there's our checking account, accounts receivable, account type, there's our accounts receivable. Now, this gets a little bit wonkier or changes a little bit from the standard financial reporting because usually for financial statement reporting, we would call this just cash and cash equivalence or something like that. We wouldn't call it bank accounts. But bank accounts, from a bookkeeping standpoint within QuickBooks, it's quite useful because the bank accounts act differently than other accounts. They have the bank feeds possibly connected to them. Now, if I go into this checking account here, notice that the cash account is like the most important account because it's the lifeblood of the company. All accounting cycles feed into cash or cash feeds into all accounting cycles, however you want to see it. So lifeblood of the cycle. So if I look at each of these cycles, the vendor cycle, no matter whether we're on a cruel or cashed based system at the end of the cycle, we would expect cash typically to be going out for goods and services that we purchased that we're going to use in the business. On the customer cycle, whether we're on an accrual system, cash based system, reliant on the bank feeds at the end of the cycle, we expect cash to be coming in, employee cycle at the end of the cycle, we expect cash to be going out. So therefore cash has more account types than any other type of any other account. And so you're often sorting the cash account more likely than other accounts using the customization and sorting options, filtering by transaction type here. So let's just think about the types of transactions. Obviously the deposits increase, the expense forms are like check forms, they're going to decrease. You've got your check forms, which are check forms that are like expense forms with check numbers that decrease. And then we've got the bill payment form, which is like a check form. It is basically a check form, but it's going to the account payable. So we always know when we see the bill payment form that accounts payable is going to go down and the payroll check form is a check in essence, but it's labeling it specifically to show us, it's a payroll check. So there's those items basically it goes up, goes up with a deposit down with check type forms is the general form, but the check form can then take different variations in terms of an expense form being a check form, the bill payment form being a check form, the payroll check form being a check form. You could also have transfers that we might talk about later. We'll definitely look at them when we get to the bank feed section or a course. So let's go back and to our balance sheet. Then we've got the accounts receivable is the next item. It's a little bit weird to have accounts receivable with a dropdown when you only have one account in it. The reason it does that is because this dropdown is created from the chart of accounts that we have created. Accounts receivable has a special need that it's gonna have a sub ledger related to it and QuickBooks will not let us post to accounts receivable unless there is a, unless I'm gonna close all these up, we have a customer related to it so it can make a sub account. So if I go into the accounts receivable, what has been used to increase and decrease the accounts receivable, it's a lot less than the cash account, right? It goes up with an invoice. That's the thing that increases accounts receivable. It goes down with a payment. That's all you're gonna see here. You're not gonna see other stuff in here unless things are something got messed up typically. You just see increases and decreases. Invoices, people owe us money. They owe us more when they get a payment. Now they owe us less because they paid us. This sub report is broken out. You can see by date, we also wanna see it by customer. So that's where the sub ledgers come in for that particular report. Right click it on the tab to the right, duplicating it. Let's take a look at a sub ledger report. The most common one, if I go down to the reports, it's too zoomed in, it's messing me up. I'm gonna go to the reports and then we're gonna say, who owes you? Let's look at the accounts receivable aging and change the date to, I'm just gonna go 123123, run it. So there it is broken out by customer. We got the sub customers 1468750, ties out to the amount here. Then you've got other current assets that drop down everything else that is a current asset that doesn't have a special need up top is in other current assets. We've got the inventory account. We're tracking inventory perpetually which kind of forms are gonna affect this account. You're gonna have inventory starting value. That's the opening balance. And then checks when we purchase the inventory. Later we might purchase with bill forms that will increase the inventory. And then invoices which decrease the inventory when we make a sale, as well as sales receipts decrease the inventory when we make a sale. That's all you're gonna see on the inventory typically. This is by dollar amount, however, and we also need to track inventory by unit. And therefore if I go to the tab to the right, we have our sub report that we've been looking at which is inventory valuation summary as of 123123. Run it 9698 is the 9698 here. And then we've got payments to deposit. That's that clearing account that goes up and down when we have the holding account for sales that we have made that we have not yet made a deposit. We have the prepaid insurance. That's the account that we've put the insurance to so that we can allocate it over the life of the insurance policy using an accruable concept. We've got the short-term investment. That's when we took money out of the checking account and put it into say stocks and bonds. For example, we've got the fixed assets. We purchased the fixed assets, but note that fixed assets are things that you don't purchase all the time. So we would expect the fixed assets to be going up with expense type forms if we paid cash for it, possibly a journal entry if we financed the purchase of equipment we took out a loan.