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Here we are in our custom zero homepage going into the new company file we set up in a prior presentation that being get great guitars thus far we have set up the new company file we entered the beginning balances imagining we pulled them in from the prior accounting system as we did so we set up some of those foundational items like the chart of accounts like the customers like the vendors like the items inventory and service items necessary to make data input as easy as possible going forward. Now we want to take a look at some of the major reports financial statement reports balance sheet and income statement and related reports think about what we did to construct them and what will happen with those reports as we do data input in the future. So to do that let's right click on the tab up top so we can put our reports in them. I'm going to duplicate the tab as that's thinking I'm going to right click and duplicate the tab again going to go back to the tab on the left as the one to the right is thinking accounting drop down. Let's go into our balance sheet here and then I'll tab to the right and then in this one accounting drop down let's go into the income statement. Now these are of course our major two financial statement reports and I wouldn't even call these just these aren't just reports these are the financial statements. So whenever we're thinking about reports we're typically thinking the major financial statements balance sheet income statement and then everything else usually is going to be providing some more detail about one or multiple line items on these major two financial statement reports. So we basically set up our balance sheet accounts and remember we set up the balance sheet accounts and not the income statement accounts. Imagining we pulled them in from the prior accounting system because the the income statement is a timing statement. And so we would like to when we start out when we pulled in our first numbers that might be set up from from something prior a prior accounting system or we might just have a bank account already set up or we already did some business and some people owe us money already know that. So we so we're going to set up those beginning items on the balance sheet and then performance wise those are going to be new sales going forward. Ideally we would like to set up those beginning balances before the current period that we're going to be working in. In our case we set up the beginning balances as of December 31st 2022 so that when we do data input it will start January 2023. So you can also see that on the balance sheet of course the accounts here are permanent. So when I go from 2022 and then I go into the current year that we'll be working in 2023 just go right in here and run it. Then the the balances are still there. They're the same balances except there is adjustment to equity as we saw in the past meaning the current amount for earnings is rolled into the owner capital account which was retained earnings. If I go to the income statement however these are timing accounts. So if I look at the last year last fiscal year let's say last fiscal year and we update that report. Now we had something in there last year but it rolls out it closes out and there won't be anything in it in the current year. So if I hit the drop down and I go into this fiscal year we don't have anything in there as of this fiscal year. So that's good. That's what we want going forward. Now let's go into the balance sheet and just take a quick look at each of these accounts and kind of imagine what's going to be happening as we go forward as we do the data input. The most complex account or the one that has the most activity is the checking account. The checking account is is is going to be the cash is the lifeblood of the company. So there's more different kinds of transactions going through the cash account than any other type of account. In other words if I look at my flow chart this is the QuickBooks desktop flow chart but I'm just using it as a reference to see the flow of forms typically in any accounting system. If you're looking at the vendor cycle whether you're on a cashed basis or on an accrual basis the end of the cycle will be decreases to the checking account. If you're looking at a customer cycle or revenue cycle no matter if you're on a cash or accrual basis the end of the cycle will be an increase to the checking account typically. And then if you're looking at a payroll cycle the end of the cycle will be a decrease to the checking account. So cash is going to be obviously involved. There's more stuff going on with cash than any other account. In practice you might have your cash connected to the bank feeds as well. We'll talk about bank feeds in a future course or section but you want to understand what forms are going in and out of the checking account and we'll get a better grasp of that as we start to do a couple months of data input. The accounts receivable is an account specific to tracking people that owe you money. So there's much less kind of stuff that's going to be happening with the accounts receivable. It's going to go up when you issue invoices and then it's going to go down when you receive payment on those invoices. The inventory account here is going to be something that is specific to the type of industry that sells inventory and it gets more complex as we saw in the past depending on how you're tracking that inventory on a perpetual method or a periodic method. We're going to be using the perpetual inventory method the most complex one to set up here and we're going to have a sub ledger for that inventory. So inventory goes up when we purchase inventory. It goes down when we sell the inventory with either an invoice or a sales a money out form. And then the furniture and fixture note that these things you can think of them as kind of like expenses that we were forced to put on the balance sheet as an asset because of the big distinction or difference between when we consume them to help us generate revenue and when we pay for them or when we purchase them whether we pay cash or finance them. So in other words if I bought supplies that are under a certain dollar amount I probably are just going to expense them. But if I buy a forklift then you would say well I can't just expense it in month one I have to put it on the books as an asset. If I want any kind of comparability between one month or year and another month or year because if I expense it in one year and I use it for 30 years it's not really fair comparison on a year by year or month by month. And the United States were forced to do that as well. This is an accrual thing to do as opposed to a cash thing to do and we're forced to do that when we get to our taxes. The nice thing about the furniture and equipment is that we don't do it we don't buy furniture and fixture or any property plants and equipment or fixed assets all the time we only do it every once in a while. So there shouldn't be a lot of activity in this account typically as compared to accounts receivable or inventory if we use inventory and accounts receivable or of course the cash account. So it's a lot more static that way. So that makes the accounting for it a little bit easier in some ways. Then we've got the accounts payable. This is an accrual account as well. We would only be using it if we're tracking the accounts payable. If you're a small business you might just be paying for things as they come do and not putting them into the accounts payable but rather just using bank feeds and paying things as they become do. But as cash management becomes more important then the accounts payable becomes more important to track. We've got the credit card. The credit card of course is stuff that we purchase on the credit card. It is similar to a bank account because we're running this through a financial institution. So we could track this in practice with bank feeds as well and that's quite common and could be quite useful because the bank feeds are going to come through as we pay for things and we can allocate them to expenses. We'll talk about bank feeds more in a future course or section. And then we've got the loan payable which represents us borrowing money which is fairly common in many businesses to finance the business by using that money to purchase say fixed assets for example and using the fixed assets then to help generate the revenue. But the loan payable, the activity with it we don't finance all the time. We're not taking loans out all the time usually unless it's like a liner credit situation. So you've got the loan is a pretty fixed transaction and if we're paying off the loan steadily then we're going to be paying it in accordance with an amortization type of table. The problem there is that we have to deal with interest and principal breakout between those two. So we'll talk about those transactions as we go and then the equity. We don't usually post anything to the capital account but instead this account is used after this beginning balance after we did the first thing to just roll over the income statement into. Now we might have other equity accounts if we're sole proprietorship for draws the money that we take out of the business which are similar to dividends if it were a corporation except that draws we can take out as the owner anytime we need without permission from the board of directors or anything and whatnot. You don't have to worry about other shareholders getting paid the same dividends and that kind of stuff. And then we might have investments which is us putting money into the company. However hopefully we're not putting money into the company all the time once it gets rolling we are generating revenue and then taking money out in the form of draws. So that's the general layout. Let's take a look at some other reports that are subsidiary reports to these major reports. So I'm going to duplicate a tab and look at some other common reports that we might be taking a look at. Now the first one I want to touch on is going to be the let's go to the accounting reports the trial balance. The trial balance I'll just type in up top trial balance. Many people that don't have an accounting background don't like maybe or aren't used to the trial balance. Let's say it that way because it has debits and credits but even if you don't like the debits and credits or are not used to them you'll notice how much easier it is to look at a trial balance that doesn't have the subtotals and it has the balance sheet on top of the income statement in one report. So this is basically like a summary of the balance sheet and income statement in one report. So instead of having two reports open as you do the data input you could if you're used to it and you feel comfortable just have the trial balance open and that could save you some tabs up top. So I think that's a really useful report. I'm going to duplicate it again. The other common report is a subsidiary report to the accounts receivable giving us a breakout by customer. So if I go up to the accounting tab and go to my reports I'm going to scroll down this time to the receipt to the this is going to be the here we are those where I want payables and receivables. So we've got the aged receivable details and the aged receivable summary. Let's just go into the summary report. You have other receivable reports but the general idea here is that as of any given time we should have be able to track our receivables by customer. So now I'm breaking out my receivable by who owes us the money. Anderson Jones Smith that ties out to what's over here the twenty thousand five hundred. Now in practice we will often be working with collections on those receivables internally going to the tab to the left by going to like contacts and looking at our customers for example contacts we could go to the customers and we get another little summary of the people that owe us money and so this is where we usually go internally but it's useful to to imagine it as a report because we don't have a total down here if you look at the report the idea is this is a sub ledger report breaking out this information not by date but by who owes us the money and it should tie into what's on the balance sheet at any given time and that's why the the zero system will often not let us enter a transaction for accounts receivable unless we have assigned a customer to it otherwise the sub ledger would not tie out to the accounts receivable and that would be messy. So if we the other one the inventory as we saw before if we're tracking I'm going to duplicate again if we're tracking inventory within the accounting system on a perpetual inventory basis then we will have inventory reports so if I go to my inventory I'll just type in inventory you know look at my inventory item list this is another sub ledger report that will be adjusted as we do inventory transactions purchasing inventory with bills checks and so on and then and then decreasing inventory on a perpetual basis with sales forms invoices and money out forms so you can see our inventory list here this will be adjusted the number of inventory 2896 as we do transactions that would increase and decrease inventory on a perpetual basis and then we've got the fixed assets they don't look again the sub reports for the fixed assets in the united states oftentimes we might do those externally in tax software for a lot many small businesses will do that because you have to do tax basis depreciation and so you might as well use the software to do both book and tax so we'll deal with those later in practice what you need to do for tax preparation at the end of the year is make sure that you have a list of the new purchases and the sales that happened during the year which there shouldn't be many of because uh we don't buy a lot of equipment from day to day we just buy periodically and then those adjustments need to be made on the sub ledger which might be on the tax software so if the proper accumulated depreciation can be calculated and then we can make periodic adjustments in our system either monthly or yearly based on that sub ledger so we'll talk more about that in the adjusting entries accounts payable has another common report so if I right click and duplicate again we've got our and let's go to the reports again and go to our reports and let's take a look at accounts payable accounts payable we've got accounts payable summary so similar report to the accounts receivable summary and the idea is that we're going to break out our payable by vendor who owes who we owe money to so in practice we'll typically be tracking that by going to our customers and our suppliers or vendors or whatever you want to call them and there's our list but once again it doesn't give us the total and so you want to think about this from a reporting standpoint as a sub ledger breaking out your accounts payable by uh vendor supplier whatever and then the total is going to tie out to the liability account on the balance sheet all right and then we've got the credit card which will have bank credit card reconciliations we may need to deal with there's no real sub ledger for the loan payable except that you might have an amortization schedule which is provided externally typically by the uh who the bank or the financial institution but if they don't give you one then you you can generate one an amortization table that'll break out interest and and uh principle for each payment using excel or online tools or actually your accountant to do that so we'll talk more about how to do that in future presentations so those are some of the some of the reports that will be impacted as we do data input so just remember as we do the data input then your primary thought is i'm going to check out what happens to my primary financial statements balance sheet income statement and then i'm also going to then think of what other subsidiary reports are going to be impacted keeping special attention to those accounts that i i want to have very important and specific subsidiary ledgers for that being the accounts receivable that has to be broken out by customer inventory that has to be broken out by items of inventory and accounts payable that needs to be broken out by uh vendor as well so when we do transactions to those accounts specifically we want to make sure that we don't do something funny to it that throws that out a whack like doing a journal entry to accounts payable instead of entering a bill which properly tracks the vendor and so on and so forth so we'll take a look at that as we do data input uh in the future let's take a quick look at some of the other reports if i go to the tap to the right and go down to our reports down here uh we've got our favorite reports we've got the financial reports the analysis the budget reports these are these are reports that would help us to kind of make projections uh out into the future the financial statement reports of course being the balance sheet and the income statement being uh the primary two reports the payables and receivable the aging reports for the payables and receivables that we looked at notice that all most of these reports are giving us more detail about one or multiple line items on the balance sheet or income statement the reconciliation reports bank reconciliation and credit card reconciliation primarily are an internal control type of report helping us to tie out to what is on the bank side of the financial institution and then we've got our taxes our 1099 report are important for the united states journal reports can help us to give us that detail of the journal entries a journal entry format and then the general ledger which is similar to those drilling down when you drill down on this particular number on the balance sheet but it'll give you the whole general ledger transaction by date report typically and then you got your transactions uh account transactions duplicate lines and inventory item summary and so on so the general idea you think first balance sheet income statement all of these other reports are basically usually subsidiary reports giving you more information about one or multiple line items and that'll help you to kind of not be overwhelmed by the number of reports