 Zero accounting software 2023 bank feeds matching bank feeds to cash-based sales form. Get ready to become an accountant hero with zero 2023. 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, purchased, and used ourselves. Here we have a western digital WD elements 20 terabyte USB 3.0 desktop external hard drive we use as part of our backup system noting that if you lower the number of terabytes of storage the price will lower dramatically as well. When you're thinking about a backup system you're usually thinking about an online system or an external hard drive system like this or ideally some combination between the two giving you some redundancy. You can also work directly from an external hard drive like this but there are some drawbacks to doing that. One being if you use this as your primary drive you're working from it's no longer a backup drive and you're going to need a backup system possibly another external hard drive and or some kind of cloud backup system and if you're working on something that takes up a lot of short term memory, a lot of RAM as you're working on it such as video editing the external hard drive can slow up the system so you might want to come up with some kind of system where you download the project you're working on to your computer to your C drive or possibly to a solid state drive which is a much more expensive external hard drive as you do the work once the work is done then save the project to an external hard drive such as this. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.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. We are in our custom zero home page going into the company file set up in a prior presentation the bank feed file duplicating some tabs as we do every time we're going to be right clicking on the tab up top so we can duplicate it and then we'll right click on the tab up top again and duplicate it again back to the tab to the middle accounting drop down going into the balance sheet report tabbing to the right accounting drop down again going into the income statement of the profit and loss report well that got kind of intense slow it down we're going to go back to the balance sheet the date looks good we're on the range looks good here let's go to the income statement changing the range to 2022 so we're on drop down 2022 January to December of 2022 and updated alright let's go to the first tab where our bank feeds are at accounting drop down we're on the bank account information which we've uploaded in a prior presentation we're focused on our checking account the top one up top drop down we want the account transaction so that's how I usually get there at least and then I'm going to go on over to the reconciliations so we're looking at deposits again this time we want to think about deposits that come through like a cash based system possibly like a cash register type of situation so let me see if I can find my deposit here so this is the one that we will be using now we've been trying to come up with systems where we're constructing our books from the bank feeds so that we can automate things as much as possible but now looking at those items that throw a wrench into the system making things a little bit more complex let's go over to our flow chart on this one and this is a QuickBooks desktop flow chart but we're just looking at the flow of the forms which is basically the same for any kind of accounting system we're on the customer or sales cycle and we're in a system now remember that we're kind of driven by the industry that we are in so the easiest industry would be like if we had gig work or something we could just wait till the deposit clears the banks their electronic transfers we could just add them to our income statements as they come through but if we're at like a point of sales system like at a cash register situation then we're still on a cash based system we're not tracking accounts receivable however we would like to generally record the transactions at that point of sale because that gives us an internal control to allow us to basically tie out how much we have received and tie that out to our various forms of payments whether that be cash or credit cards or that kind of thing so normally we're going to want to enter the sales receipts and then you can imagine a system where we have the sales receipts here and we basically try to tie out the bank feeds directly to the sales receipts in a similar way as we did with the create an invoice where we have the bank feeds tie out to the invoice so if you could do that even if you were to do that even if that was possible that would mean that when you make the sales receipts you could just deposit the sales receipts at that point directly into the checking account and then basically you could match out your bank feeds to what cleared on the checking account however oftentimes it's going to be a bit more of a problem because if you're getting paid at a cash register with different forms of payment you're either getting cash or you're going to be getting credit card payments or something like that which means there's a financial institution in the middle of the transaction so if it were cash for example you might be getting multiple cash receipts from the sales receipts and then when you deposit the sales receipts into the bank you're going to be depositing them as one lump sum therefore what's going to be seen on the bank statement is just going to be one lump sum and if you deposit each sales transaction into our system one at a time it's going to be difficult to reconcile so what we typically have to do oftentimes is make that clearing account possibly so that when we make the sales we record them into a clearing account and then we take them out of the clearing account and put them into the checking account in the same format as we'll be seeing on the bank feeds and that's also a system as we talked about in a prior presentation that might help us to deal with fees and that kind of stuff as well so we can come up with a system that goes into the clearing account remember that if you're matching anything and you have to match multiple things to tie out to a deposit to tie out what's in your system to a deposit form then you probably don't have the most efficient system the reconciliation should be easy so let me show you what I mean, let's say that we have this 1,015 we're going to go backwards and imagine what happened first we enter sales at like a cash register multiple of them that will tie out to this number so I'm going to go up top and say okay and that happened on sometime in October or September let's say, all right, drop down let's say we're at a cash register, receive money for them we're getting paid now here's where the choice comes in do we want to put it directly into the checking account now if we do, if we put it directly into the checking account we basically are just entering a deposit form and we can connect the deposit form to the bank feeds using the matching system however, again, it will only work if every deposit that we make is going to show up on the bank feeds for that dollar amount which won't be the case if we're using cash or if we're using credit cards or something like that so we set up a clearing account in a prior presentation which is just a cash account that we didn't connect to the bank feeds as a clearing account and so what I'm going to do is I'm going to first put it into that account and I'll say next, let's say this is going to be for customer customer number five, let's say customer number five and we got to bring this back to September of 2023 so let's bring it on back bring it on back to September where the grass is green and the girls are I don't know, I got guns and roses in my some band some song, I don't know what just get back, focus we're going to say $500 and the account is going to be sales and there it is, so this is going to be a money form so it's going to be increasing, not the checking account but the clearing account by $500 and then the other side is going to go into the sales account I almost lost it there let's save and add another save and can I have another so save and another and let's say this is for customer number six and we'll bring it on back take me back to the Paradise City where the grass is green and the girls are pretty September, let's say this happened September 1st as well and I have multiple talents as you can tell, singing musical acuity $515.25 let's do this one and this is going to go into the sales account as well and so this one, the $500 and the $515.25 will add up to the $1,015.25 is that right? yeah, that should work so this is also going to be increasing the clearing account by the $515.25 and then the sales account so let's go ahead and save that and we'll check it out so if I go back on over to the balance sheet I can balance this sheet on my pinky finger I've balanced the sheet okay so we're going to say this is going to go into the clearing account there's the $1,015.25 so here we have the $1,015.25 so which are the two transactions that we made of the $500 and the $515.25 now if I made these two transactions directly into the checking account then you can imagine that we might be able to kind of tie it out because I could go over here and say okay let's actually do that just well no let me just show you if I go back on over here and I go into my checking account accounting drop down and bank accounts and if we go into the drop in down and we go into the account transactions again and we go into the reconcile so that we can and then we find that $1,015. There it is now if I do if I deposit those two directly into the checking account it probably wouldn't have found them even though they add up to $1,015.25 but I could go to the match and I would have been able to see those transactions here I can't see them now because I deposited them into the clearing account but if I deposited them directly into the checking account I could go in here and try to match them off so you can imagine a system where you can try to do that but usually that's not the system that you usually want usually you're going to think how can I come up with an accounting system so by the time I get into the reconcile process over here it's going to be as easy as possible and that's why the clearing account might come into play because you might have other things that are involved too like fees that can be involved so that means I'm going to put it into the clearing account here as we did and then I'm going to transfer it from the clearing account to the checking account in the same grouping as I expect to be seen on the bank feeds and you have to figure out how you're going to do that depending on your system and why and how you're getting paid right if you're getting cash payments then the amount that's going to be deposited into your bank will be dependent on at the end of the night you're going to physically deposit the money into the checking account and so you'll know what that deposit is and that's why then you can take it out of the clearing account in the same grouping as you put in the bank if you have some intermediary credit card company PayPal, Stripes then you've got to figure out how do those systems work and how are they grouping my payments together so that you can put them you can take them out of the clearing account and deposit them into your checking account and if they also have fees involved in some way then you can see how you can integrate the fees and possibly the clearing account can help you to make sure that you take into account the fees and transfer them from the clearing account possibly into the checking account so now that they will be in the checking account in the same format as we'll show on the bank statements so that you can reconcile now I'm going to do this with a transfer form transferring from here to here remember that the transfer form is a little confusing because I just want to point out that I could use three forms to do this I could say if I want to take money out of here and put it into here I could do that with a deposit form but a deposit form will look correct over here so you might actually use that to receive money form but the deposit form will also be showing here as a decrease to a checking account now this is just a clearing account so maybe it's not a big deal but that still looks a little funny you could use a check form or a spend money form which would take money out of the clearing account which would look correct here but then you would have a check form that would be increasing the account which would look funny and if you wanted to sort, use filtering options buy one in here and try to filter my accounts using my filtering tools then I couldn't really filter by the source as easily because now if I would have transactions going the wrong way because normally the received money forms should be increasing and the spend money forms should be decreasing not the other way around so that's why you have a transfer form because the transfer form could be an increase or a decrease type of transaction it doesn't look funny on either side alright that's the point, let's go to the first tab and let's do a transfer form we're going to go up top and say transformer form transfer form more than beats the eye I would say beats the eye which doesn't make it meets the eye more than beats the eye more than meets the eye accounting it's going into the checking account it's going from the cash clearing account into the checking account and this is happening back in 2022 this happened back in 2022 let's say 17 FEB and let's say the amount is 1015.25 and let's make the transfer let's make the transfer transformation has happened that's the transformer song by the way in case people don't know transformers so now you've got the clearing account is gone and we put that amount into the checking account clearing account cleared out that's what happens with clearing accounts they go back down once the purpose has been served as the service of this purpose has been so here's the 1015.25 there's our transfer so notice the transfer form doesn't look funny it doesn't look like it's a spend money form that's like an increase or anything right so then let's go back and see now if the bank feeds should recognize now because we have the same dollar amount so now the bank feeds should be easy that's the whole point here the bank feed, the recognition should be easy so I'm going to go to the banking account adding not an adding what are you doing you're going to confuse I'm going to get notices for that people are going to tell me that I confused them managed account and then account transactions okay and then we're going to go into the reconcile and let's find and let's see if that match happens it see if it recognizes that's not the one it recognize that one that's not what we're looking here it is boom recognized it because now we put the dollar amount in the same dollar amount and so the reconciliation should be easy so you want to have a system where the reconciliation is like this right the system could recognize it because the dollar amount is coming in in the proper dollar amount and this reconciliation system should be as easy as clicking off boom that didn't record anything new by the way because we had to record it all on our side so you might be thinking what is this reconciliation thing doing for me in this case well it's helping us to reconcile with the bank reconciliation it's helping us that's what it's doing it's not actually creating the financial statements in this case because we have to do more of a full service type of system which isn't a bad thing it just happens to be what we have to do be we can't rely on the bank all the time because we have this accrual component that took place and and that and through a wrench into the system so bank feeds don't solve all the problems all your problems won't be solved with the bank feeds just like you know I try you know you could try bank fees to solve all your problems liquor drugs or something right none of it none of it saw love what it doesn't solve all of your problems you still have you still have to do you know it could help out a little bit and let's look at the let's look at the trial balance now I'm going to go to the accounting drop-down let's look at our reports and see what the trial balance looks like try pin in trial balance and there and so there we have it so we've been just constructing this as we go look at this look at this thing look what we've made it's amazing so the balance sheet stops at the equity and then we've been making the income statement the debits and the credits are in balance that says the double entry accounting system is working it's the same thing from a double entry accounting standpoint as going to the balance sheet and saying hey my assets equal my liabilities and my equity how does the income statement fit into this whole picture on the balance sheet if the assets equal liabilities and equity is the whole thing because the income statement is squished into this one number current year earnings 8624.79 which is the bottom line of the income statement if you update it I have to update it now it's the bottom line of the 8624.79 here this being our timing statement telling us how we did over the year period which is not bad I must say we're not getting rich or anything but it's still respectable I feel like that's legitimate legitimate a job well done but over here you can see that on the equity side we only we don't have that current number in the equity it stops at retained earnings so the current year earnings are broken out and so that's why we can put the balance sheet on top of the income statement without all the subtotals and use the debits and credits which is actually more efficient than the double entry accounting system represented in the accounting equation which is on the balance sheet assets equal liabilities plus equity and then breaking out the income statement which is the current year portion in a separate report of the profit and loss or income statement