 zero accounting software 2023 bank rules same vendor to accounts filtered by amount get ready to become an accountant hero with zero 2023 here we are in our custom zero home page going into the company file we set up in a prior presentation the bank feed file let's duplicate those tabs to put the reports in like we do every time right clicking on that 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 were 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 purchase and use ourselves Bayer dynamic not sure if I said that right but this is the DT 770 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 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dot 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 at tab up top so we can duplicate it and then we will right click again and duplicate again let's go back to the tab to the middle accounting drop down open up the balance sheet report tabbing to the right accounting drop down this time of course the income statement sometimes called the profit and the loss I just call it profit because I have no losses man losses aren't a thing I don't I manifest my destiny by not thinking about losses I only manifest profits anyways 2022 by going to the end tab date 2022 the 31st and update it so there we have it let's go on to the first tab now and go to our bank feed information accounting drop down we've got the bank accounts that's where our bank feed stuff is we're going into the checking account we've updated information to our checking account we're in the reconcile tab we're doing our best to try to construct everything we can from the bank feed so the stuff comes in from the bank feeds and we're creating the transactions from the bank feeds we're looking at some more complex rules most of the time the rules are pretty straightforward we paid the telephone bill so we've we assigned Verizon to the telephone expense straightforward but sometimes they could be a little bit more confusing this time we want to look at a little bit more nuanced rule around whether or not we've record something as say supplies or whether we're going to record it as an asset a fixed asset so office depot for example any kind of any kind of home depot type of store this could be the case because we might be purchasing a whole bunch of stuff mainly supplies from it but sometimes we might be purchasing equipment from it and we want to be able to set up a rule that can distinguish or at least give us an indication as to whether we might have to record something a little bit differently so here's like like office depot here and then we've got some other office depots and some more expensive stuff that we purchase from office depot on the second page so let's think about this in a general conceptual format if I go to my balance sheet here note there obviously the checking accounts going down most of the time we're going to go to the income statement and just record it as an expense of supplies because that's what we normally purchase from let's say office depot but sometimes we might purchase something that we have to categorize as an asset now this is one of those areas where even if you're a small company you often have to deviate from a cash based system you might say well I don't want to I don't want to deviate from a cash based system I don't care if I bought like a you know $10,000 piece of equipment I want to purchase I paid cash for it I want to just reduce the or record it as an expense but if you're in the United States at least you might have to deal with taxes and the tax code even for small businesses is going to force you to put it on the books as an asset and then to depreciate it so you want to make sure you're in compliance at least for that reason and obviously just from a conceptual framework it makes sense to put something on the books as an asset if it's a large purchase even if paid cash because if for example you purchased a $50,000 piece of equipment for cash and you expensed it in January and then you tried to compare your January and February income statements you would have this $50,000 supplies expense in January and very little supplies expense in February and it would make it look like you had a bad January which isn't the purpose of the income statement in general the purpose of the income statement is to try to measure performance over time and what really happened is you purchased a $50,000 thing that you're going to be using multiple periods into the future so that's why we want to put it on the books as an asset and then allocate the cost over the time frame that we're going to use it that's that accrual kind of concept so as we do this also just realize that on the balance sheet if you put things into the equipment account you want to make sure that you're kind of lined up with whatever your sub ledger will be used to track the equipment for the depreciation and accumulated depreciation often done in the United States by external software such as tax software due to the fact that even small businesses are going to have to do their taxes and you're going to have to put this into the tax software anyways and depreciated on a tax basis so you might as well use that same tax software to calculate your book basis as well whether or not your book basis is simply going to be on a tax basis or whether you're going to have two different bases in the United States of tax bases and a book basis so you want to talk to your accountant or tax professional or whatever software that you're going to be using to see what account categories they have in their depreciation sub ledgers so you can line up your accounts here for things that you're purchasing to the sub ledgers also just realize that when you purchase the equipment you might sometimes be having a loan related to the equipment so now you might put a down payment on the equipment you might finance the rest of the equipment and then you have a loan now there's three accounts affected now that could be a little bit confusing when you're putting a loan on the books as you purchase equipment and using the bank feeds just from a bookkeeping perspective so a couple different ways you could deal with that you could see the loan come through from the bookkeeping perspective and put it on the books track the loan with an amortization schedule and so on or possibly you could try to keep everything as much as possible on a cash based system or at least a system that you can automate with zero keeping all the documentation for loans as well as the equipment purchases to then have adjusting entries possibly at the end of the year done by your tax professional or CPA firm or accountant at that point in time in that case you could just say I'm just going to record the money that I paid in the equipment asset I'm going to save all the documentation so at the end of the year the accountant can shore up the loan the loan balance and all that kind of stuff all the payments I make on the loan I'm just going to record to a loan account instead of breaking out the interest so that I can automate my system with the bank feeds and then give all this documentation to my accountant at the end of the year that can shore up the information entering the proper transaction for the equipment taking into consideration the loan breaking out the interest portion of the loan and breaking out short term and long term loan account if necessary okay so let's go back to the first account we're really just kind of focused on the bank rule we're going to come up with an arbitrary rule here saying hey if it's below a thousand dollars just expense it now that thousand dollar limit is kind of arbitrary because we're just picking a number in theory if you're using something for more than a year you should put on the books as an asset but in practice of course it's kind of immaterial under a certain dollar amount so you can pick whatever dollar amount you think is appropriate I'm gonna choose a thousand dollars right so I'm gonna say all right let's create a rule and this is the office so it's gonna be any conditions match I'm gonna say that all conditions have to match now and I'm gonna say that it has to have a description that contains or let's do this to the bank the any text so the normal thing is if it contains office depot that's just like normal and you also have to have this rule met that the amount is below is less than the amount has to be less than a thousand dollars if it's less than a thousand dollars we're just gonna write it off to an expense if it's more than a thousand dollars and its office depot don't apply this rule because we might have to put it on the books as an asset so I'm gonna say existing contact let's put let's just copy the name where's the name office depot I can copy it from here copy that boom office depot and I'll say under a thousand well no let's just call it office depot what are you doing that's okay there's our our new vendor and then we're gonna stay down here that this needs to go to supplies supplies and then I'm not doing the location thing well that was our new location field we played with last time we won't but you could assign it to a location because we added that here and then reference I'm gonna say it applies to all the accounts and the name of the rule office depot under one thousand dollars all right so there it is let's go ahead and save it and then now this might be the only rule that you apply right because I can go into here and say okay this one's good under a thousand no problem and this one is good it's under a thousand let's pull that one in this one office depot didn't apply the rule because it's over a thousand dollars right so so it applies so it didn't apply that rule there that's what we want now you could leave it like that you could just say well if it's over a thousand dollars then I'm gonna decide whether or not I want to put it on the books as supplies or as equipment of some other equipment account because I might then have to decide if I need to put it into equipment or tools or you know whatever a category but usually it would be equipment or what we will do shortly is make another rule that will say if it's over a thousand dollars you want to put it into the fixed asset all right so I'm gonna go to the town let's go and see what we've done so far before we do that update the balance sheet so checking accounts going down so that's no I don't even need to look at it because we've done that we see we that's that's a whatever and go to the income statement and in supplies we recorded the supplies according to the rule straightforward except that we have that dollar limit restricting the other stuff so there's these pulling in movie B to the end spend money for them be in so it looks good let's go to the first half again and now let's create the other rule saying hey look if it's from office depot and over a thousand put it into equipment not supplies so we're gonna hit the drop-down but not too hard just tap the drop-down create a bank rule and let's make another one and we want all conditions so all the conditions must be met one any text that the normal part of the rule if it contains office depot that's one bit but we have another whole piece whole component down here you also have to this has to happen as well or else you can't do it don't do the rule zero so it has to be a greater than a thousand dollars so there we have it so now we have one rule under a thousand one greater than a thousand now you might be saying well what if I had a bill for exactly a thousand dollars well then the you know the two rules might not catch it and you'd have to put it but you could make a third rule that said it was equal to a thousand dollars if you really want to but you probably be pretty safe with just the two rules you can make it even more precise you could put pennies on it so that you know it would be down to the penny instead of to the dollar and you don't have if it was you know or whatever so but we'll keep it like that I think we'll be okay so then I'm gonna also say this is office depot same vendor and then this is going to be equipment and okay and then I'm gonna say reference all accounts and then office depot over one thousand dollars let's go ahead and save it and check that out so now it's applying this rule here so it applied it there now it's picking that up boom shock a locker here's this under rule here's the over rule and and here's the under rule all right let's go to the balance sheet and see what happens k posso k in the world posso over here k for the love of deals posso all right so then we're gonna say that the checking account went down and the equipment account went up so if I go into the equipment account we can see then we had the change happening it's happening here so office depot there for the over if it's over a thousand and then and then on the other side if all the stuff that was under went to of course once again the supplies account was updated supplies all right and so if I go to the first tab we can check out those rules if we want to modify the rules by the way I can go to the accounting drop down bank accounts and we can check out all these rules that we've been making all these super cool rules you know I used to not like rules but when I'm making the rules then they're excellent I make good rules other people don't make good rules that's the problem people making rules that I have to follow they don't know what they're doing but when I'm making the rules then then the rules are perfect so if it's office depot under a thousand office depot over if you if you needed to edit this thing then you go into it and you can make your modifications over here so there we have that so that looks good now just a quick note that if I go to the balance sheet we have the items in the equipment you might be asking well when are we gonna expense these items we're gonna expense them in the form of depreciation and that will typically happen in the United States you might want to track that again with a separate schedule with the tax depreciation schedules because you're gonna have to add it to the tax depreciation anyways and and then you can get the depreciation schedules from there either on a tax basis if you want to run your books on the tax basis to match the tax code or you can have it do it on a on a on a book basis possibly most a lot of software can do that and then we would do periodic adjustments possibly at the end of the month possibly at the end of the year which usually have another account which would be credit to you know accumulated depreciation for the equipment and once we start adding those separate accounts for equipment automobile and stuff zero has this really nice editing layout item down here that allows us to group for example the equipment account to the related accumulated depreciation we can put the equipment on top even though the alphabetical order would be reversed so really nice flexibility to customize our statement more so I think than other software like QuickBooks online with sorting out the equipment so that's how that would generally work