 QuickBooks Desktop 2023. Add normal expenses to books from Bank Feed, Limbo, and Make Rules. Let's do it with Intuit's QuickBooks Desktop 2023. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Here we are in QuickBooks Desktop Bank Feed practice file. We started up in a prior presentation going through the setup process we do every time. Maximize the homepage to the gray area in the view dropdown. We've got the hide icon bar, open windows list, open windows open on the left. We're going to now open up the major two financial statement reports, balance sheet and income statement or profit and loss, which we have not done in prior presentations because we haven't added any data to them. We will be adding data to them this time through the information we got from the bank feeds. Every time we enter a transaction, whether it be from bank feeds or from a transaction in the accounting process, we want to visualize in our mind what will be the impact on the end result, the major financial statements, balance sheet income statement or profit and loss, and the subsidiary reports related to them. So to open them up, let's go to the reports dropdown, company and financial profit and loss first. And I'm going to change the date range up top. I'm going to put it for the whole year 010122 to 123122. And so we're going to be entering data within that year. If you're doing your practice problem at a different date, obviously you want to enter the data or have a range that will be including the date range that you'll be entering the data within. I'm going to increase the size of the report here by going to the customize report, fonts and numbers, changing the font. And I'm going to increase it to 14. You may not have to do that on your end, but that hopefully yes here and okay will make it easier to see. I'm going to go to the reports dropdown again and go to the company and financial and the balance sheet standard this time. These are the two major financial statement reports. There's only one date here. I'm going to customize it because I still want to see the date range. So from 010122 to 123122. The range will be important when we zoom in, which we'll see as we add data, fonts and numbers changing the font. I'm going to bring this up to 14 again. Okay. Yes. Okay. So those are two major financial statement reports. Now I'm going to open the bank feeds. We're going to go to the banking dropdown, bank feeds, bank feed center. This would only be there if you had entered bank feeds or have a connection to the bank, which we set up in prior presentations. We've already pulled data from the bank into our system because it's the first time that we have done that. Most all the transactions, in our case, are in the uncategorized area. That's going to be typical when you first set up the bank feeds. They're in what we call, I call at least bank feed limbo. They're in the system, but they're not added in such a way that they're making an impact on or checking the financial statement reports, balance sheet and income statement. So now we're going to be adding that data. As we add the data, as we add the transactions, we're going to give those pieces of information that are necessary to complete the transaction, pull it into the promised land of the financial statements from bank feed limbo, which includes a customer or vendor and an account. Those are the typically the things that are going to be missing and then we can add it. Now as we add those items, we can also say, Hey, is it possible for me to take this data that has been included in this information and the bank memo in order to memorize transaction or give rules to transactions so that when I just download the data in the future, it can be more automated. That's what you want to do when you first set up the bank feed. So when you first set up the bank feeds, it's not a totally easy straightforward process. But if you do it well and structure it going forward, making rules that make sense, then the process becomes more and more automated going forward. That's what you want to be doing. Now if I go back to the homepage here, we talked in prior presentations about when it's kind of easiest to do the bank feeds and certain scenarios when the bank feeds are going to have to be checking the numbers as opposed to building the financial statements from the bank feeds. We're first going to be starting out with some bills because oftentimes for small businesses, I think the outflows are going to be easier because a lot of times people make electronic transfers for the payments that they make. And if you have an electronic transfer and you're not tracking accounts payable, that's the kind of system that's quite easy to set up the bank feeds for. So we'll start off with the easy transactions and then we'll add more complexity. So the easy transactions would be like, okay, I'm going to pay my utility bill and I'm going to pay something like my gas or telephone bill or something with an online transfer and I'm just going to wait till it clears the bank and then I'm just going to record it with the use of the bank feeds, which in essence would be the use of a check form that would be generated when I make the bank feed. So let's see what that looks like. If I go to my bank feed transactions, now I'm just going to sort my data. Oftentimes you want to sort it possibly by the memo here or the download as item and then I can kind of search through this and say, okay, I'm looking for like an easy type of transaction, which might be, let's do the SoCal gas. Let's do that one. That's a good one. So I'm just going to pick one of these right now. Now notice that they're next to each other. So if I create a transaction for one of them and then create a rule that puts in place this data, which is the same for these transactions here, then it should be, the rule should apply to the other of them and everything should be populated automatically. But I'm just going to add one at a time right now. So notice that you can kind of add some of the data in this field without going into, to the more details. So you could say, I'm going to add basically the payee, which is going to be right here, the vendor note. Oftentimes when people set up their bank feeds quickly, they neglect the use of the vendor because it's possible to record the transaction without a vendor, without a customer, you'll still have the account, which means your financial statements should still be correct. But if you want to sort your transactions by who you paid by going, say to the vendor center here, you won't have that added detail if you don't add the vendor. So you typically want to do that. Usually if it's an electronic transfer, the vendor will be in the memo here in some way or the description or whatever you want to call it. So you can pull it from there, but note that you don't need to be copying the whole description. The whole description might not be the vendor. It might just be part of the description that you're going to be pulling over. You also want to be careful that you're not adding multiple vendors that are spelled like slightly differently because you want to be consistent with the vendors and which accounts they're going to be assigned to. Now something that's a little bit annoying is that you can't really just copy and paste the information here because it won't let you highlight it. So we still have to basically type it in. I'm going to type these items into the face here and then we're going to go into the detail. We'll go into the detail one so that we can add the rules making the transactions easier in the future. And two, this is usually where I go in order to enter all the data because usually I'm going to add a rule anyways, but just noting there could be some instances we're adding the data right here could be useful. So I'm going to say, okay, let's let's type in. Hold on a second. I'm going to close this out. I'm going to type in you could add the vendor down here. I often just type in the vendor so Cal gas and then if nothing populates down below, then I'm going to add it. I can say tab and that will say add either a quick ad or we can set up a more complex ad. If we set up a more complex ad, it's going to ask for things like the phone number and so on email. We don't usually need that stuff for vendors like the utility company. So I'm just going to do a quick ad. It's going to be a vendor vendor is the term that QuickBooks uses for people that we are paying money going out typically for goods and services. So I'm going to say, okay, then we've got the account that needs to be added. Now in the chart of accounts, it's over here in the list, drop down in the chart of accounts. This was set up as the underlying foundational thing when we chose the industry for us. We didn't choose an industry because I want to create accounts as we go, which can be a great tool to really customize your accounts and not be bloated and have too many accounts. However, if you choose a chart of accounts from an industry, then you're going to want to as you're entering the accounts, see if the account that you need is here. Some of the accounts are kind of, you would think somewhat standardized. However, there's a lot of leeway, especially in the expense accounts in terms of what accounts you want to use that will be best for your internal use and purposes. So general best practices, if there's an account, use it that matches what you want. If it's not worded exactly the way you want it, you can go in here and reword the account by right clicking on the account and editing it to change the name of it. If you don't do that and you add accounts with similar names, it's likely in the future you will post stuff to two different accounts and you want them going to the same account. If there's no account, then you can add a new account as you go, which is what we will do here. Also note, there's no really set rule for the kind of accounts you want. So for example here, you might think utilities is the gas should go to utilities, but you could have one utilities accounts for gas, electric, and the electric and a telephone. But oftentimes people break out the telephone these days. So you could break that out. You could also have a parent account for utilities and then have underneath it the three accounts, telephone, gas and electric, for example. So you have different options just in terms of how you would like to format things. Just note that when you consider your income statement, which is usually the longest statement because expenses have the longest account types, then you want to balance between having a really long income statement that has a whole lot of detail and a really short income statement. A short income statement with less accounts is easier to deal with, but doesn't give you as much information. A longer income statement gives you more detailed information, but is more work, more tedious to both put together and sort through when you're trying to figure out what's going on with the income statement. Alright, let's go back to the bank feeds and I'm going to add, I'm just going to call it utilities, utilities and then tab. It's going to ask me to set up the account, set it up. I'm going to make it an expense type of account. Money going out is typically, but not always an expense type of account because we might be buying like assets, furniture and equipment. For example, I'm going to call it utilities. If I did set up a sub account, then if I made a utilities, the parent account, I could set this up as a sub account of utilities, which would line it up underneath utilities and call it gas or something like that. I'm not going to put a description not required or a note. I don't usually use the tax mapping. I have a course on that. It's got potential to use, but oftentimes it's not completely useful due to the logistics of it. I won't get into that now. I'm not going to deal with it. We're going to say save it and close it. So then I'm going to go into this item with a dropdown instead of adding it right now. I've got the information I need to add it, but I'd like to add a rule number one because I don't want QuickBooks to just do the rules themselves because they're not going to be specific enough. I want to add my own rule. And I also just want to look at the details here because this is usually how I enter the data in any case. So you've got your information up top. You've got your date. You've got your memo. And then this is what we have added, the payee. This is the account that we added. And then if it's billable, you can mark off billable here. I won't get into the billable components too much just to note that a billable item means that if you're paying something out and then you want to bill it or add it to an invoice, have it be part of the invoice, you can use that billable feature. Again, I won't dive into more detail than that at this time. You could also have more complex transactions sometimes, meaning cash is going to go down, for example, here 3766, but you might have two accounts that you need to go to down below. This happens oftentimes when paying off a loan, for example, in which case you can add an account so that this is called splitting in QuickBooks. You can split the account down here, cash is going down, the other side going to these two separate accounts. I'm going to close that back out with the trash can. I'm going to create a rule down below so that in the future, this will be automated. So I'm going to say create a rule. Now the rule, again, I can't always just copy this. I'm tempted to be able to copy and paste that, but it doesn't always let me do it. So I'm just going to call it the same as the vendor. So, cow, gas, and then it's going to be a money out rule. The options we have, money out, money in or both. And so usually money out is going to be default when you're talking about money going out. And then we have the option of any or all of the conditions. These are the conditions below. It doesn't matter which one you choose if you only have one condition as we do here. However, there could be cases where you have two conditions, which is more rare. One condition is usually all you need. But for example, and we'll talk about multiple conditions in the future, imagine that you have two locations with the SoCal gas company, and you wanted to distinguish them. And you could find something possibly in the memo that does distinguish them. So then you might want to have one condition that would be, this is coming from the description. And I wanted to match or possibly contain this information. And then you can add another one possibly from the memo that includes possibly some numbers that are going to be distinguishing factors of the location that can then allow you to break out to separate accounts for those two locations. We'll talk more about that later. I'm going to exit or close trash can this one. This is our description. So we have description, memo and amount. So the amount you can have equal to greater than that's not the most common usage. But again, you can imagine scenarios where you might say if it's over a certain amount, you might have it as an asset under a certain amount, you might have it as an expense. We'll talk more about that later. Usually you're looking at the description and then you have the begins with and contains does not contain ends with or matches. So oftentimes you're looking for a match or contains. I'm going to go into contains and then I'm looking for that. So Cal some I'm looking for this item up here, which was in there until I deleted it. So I'm going to say caps lock. So Cal gas. Now I'm not going to add paid or anything like that. I just wanted to add that much. And so if the memo changes a little bit, then it'll still the rule will still pick it up. It'll be more flexible as opposed to an exact match. We've got the name down here. That's going to be the vendor, the utilities, that's the account, and then a customer. We don't have one because we don't have a customer. It's money out rule. So I'm going to save it. There it is. I'm going to add this now to the register, which should also add it then to the financial statements. What's going to what's it going to do? It's a cat. It's basically a check form. That's the form used to decrease the checking account. Therefore, the cash is going to go down. The other side's going to then go to the expense account of utilities. So I'll save it and close it. And then you can see that we have one item in the register now. That's the one that moved from here to here. And that will kind of disappear if you log back out and log back in. But you can see that has been added in this session. And then you've got two items that have been added to recognize because it applied the rule. It did not yet pull them all the way out of Bank Feed Limbo, which is what I call this area, to the promised land of the financial statements. But all you have to do is one more step and you can kind of double check them here. If you did that, which we'll do later, it would then pull them over to the add to the register. Now let's look at the financial statements in the profit and loss, the P&L. Well, let's look at the balance sheet first. The balance sheet, there's your cash account. Now this is where I'm going to drill down. This is the zooming feature. This is why I wanted a date range because if I zoom down on that, I could see the activity. There's a transaction. There's SoCal. If I zoom down on that, it takes me not to the bank feeds, but to a check form. The check form being the form used to decrease the checking account, the other side going to the expense item. So even though we're using bank feeds, the bank feeds are then going to default to the forms that are most are used for typical kind of transactions decreases to the checking account typical form being the check form closing this back out. Notice it's got this little mark here. That indicates that it's kind of going to help us to check it off when we do the bank reconciliations because obviously since we got this transaction directly from the bank, it matches the bank. So we'll talk more about that later closing this back out. The other side goes to the profit and loss. So it's in utilities. Notice again, we assigned the utilities account. We could have assigned it to the gas or something like that. We could have made a parent utilities accounts and then had three accounts under it telephone, gas, for example. So you have different different options that you can basically imagine and how you'd want to see it. And you can see how how much more space it would take if I have one account for those three items versus a parent account and three accounts below it, in which case I would have a parent three accounts and then another sub account. So you can envision how much longer your financials will be as you add more detail for items like that. Also note that the income statement is related to the balance sheet because net income here ties out to net income here, which if I was to move this up one day would roll into just equity, which we'll talk about later. As you construct the financial statements, it's useful to always look at the financials as you enter data and kind of see what's happening within them. Let's try another one. I'll also just note if I go to the vendor dropdown, vendor center, there's the vendor that's been set up. There's the check. If I did not add the vendor, then my financial statements would still be populated, but I would not have this added information to search who got paid, you know, by vendor. Okay. So let's go back on over to the bank feeds. Let's try another one. I'm going to go back to the unrecognized transactions and let's just pick like a telephone. I'm going to order these this way, Verizon. Let's pay Verizon here. So I'm going to pay Verizon with this one. Let's do this one and say, okay, the pay E. I'm going to pull that from here and say this is Verizon wireless. Hopefully I will misspell things most likely. So I apologize in advance. I'm going to not focus on that and that I'm going to say tab and then I'm going to then say this is going to be a quick add again because I don't need their phone number and all that kind of stuff. So I'm going to say quick add here and then it's going to be a vendor money going out. Looks good. Then the account, if I had a chart of accounts given to me, I would look for the account that I set up when I set up my first QuickBooks file. If there's not one there, there usually would be if it was telephone, if there's not one there, then I would add an account here. We decided to add our accounts as I go. So my thought process is, do I want to add the telephone to utilities or do I want to break it out into its own account? I'm going to break it out into its own account, which is quite common with the telephone these days. I'm going to say telephone. We also could, you can imagine, have multiple telephone accounts. You might have a wireless account and a land account. Maybe you want to break those out for some reason. You would only want to do that if breaking them out would give you more information you think relevant for your budgeting and so on. So let's go ahead and say tab. It's going to be setting it up. I'm just going to be an expense. That's typically the default telephone. It's not going to be a sub account because I decided not to make it the sub account of apparent account of utilities, but just have them completely different accounts. Utilities now to me, meaning the gas and electric telephone being separate, no description, no tax assigned. Save it and close it. And so now I'm going to go onto the right. I'm going to add more details so I can see this screen and add rules. So now we've got the date. We've got the and we got the downloaded as information up top. We added that. We added this. It could we're not going to do with the billable. That looks good. Let's create a rule with it. Now the rule I'm just going to create as the same name as the vendor. I'm just going to call it Verizon wireless and I could say all or any does it matter because I only have one item down below within the description. I want it to not match. I'm just going to say contains is enough for me. I don't need payments if it says Verizon wireless. That should be good enough to go. So the name that's looks good. Telephone. That's the category or or the account. So that looks good. I'm going to say save it. And then we'll save to the register here as well. And notice it's telling me it's 90 days old. That's because I've got my my rules in place. So I'm going to say close save and close. Those are reminders. Not really rules. Those are in by the way the edit drop down preferences. And you're in the reminders here or this is where a lot of reminders are company preferences. Now note these reminders can be useful if you're working in real time. But if you're not working in real time then then they can be kind of annoying. So oftentimes you want to turn off the reminders if you're entering like a whole year's worth of data. And that will be that'll you know save you some time. The other setting is up here in accounting up top and then company preferences. Warrant of transactions are 90 days in past. I'm going to undo that. Warrant of transactions are 30 days. Now these are great things to have if you're working real time. But we're not. And so they can be annoying. I'm going to close this back out. And so and so we should our dates should be correct too because we're pulling this stuff in directly from the bank. So it's going to be showing the bank date. That's the cleared at least. Okay. So then we've got the two transactions now have been added into the register. And now we've got recognized transactions for of them now that could just easily be pulled over. But I'm not going to do that yet at this point. Let's first go to the profit and loss or let's go to the balance sheet. And then on the balance sheet if I double click here there's the two transactions. Here's the Verizon. They're both check type of forms. If I go into Verizon double clicking goes into the check type form. The other side go into the expense account down below closing this back out closing this back out in the profit and loss. Now we've got the telephone and the utilities. If I go into the telephone there's the check form double clicking on it. There's the actual check form that was created from the bank feed closing this closing this. I can see that the net income here matches what's on the balance sheet asset sequel liabilities plus equity. Obviously we have to enter the beginning balance for the checking account. We'll deal with that later. And so but you can kind of get an idea of how these forms are going to be related. If I bring this up a date notice that that net income will roll into owner's equity. Right. That's the that's just trying to tell you how net income ties into in essence the balance sheet. If I go into the vendor center we've now got our two vendors which we can sort our data you know by the vendors on the right hand side for that as well. If I go back into my bank feeds the rules now are up top. So now I've defined the rules. If there's changes to them I can go into these rules. I can edit the rules and dig into them in more detail. We'll get into more detail about more complexities and the rules later. But as you're entering transactions you want to always keep the rules in mind so that you're the ones you're the ones setting the rules so you don't have a just a mess of rules that you don't understand that were made automatically and might not be as specific as you want them to be. So you'd like to actually be in control of the rules is what I would suggest as opposed to having QuickBooks kind of making the rules because it might not be as specific. Okay so that's going to be generally it. Notice the other report that you want to keep in mind is the accounting and taxes trial balance. I'm going to change from 010122 to 123122 and customize this one and go to the fonts and numbers changing the font. Let's bring this up to 16. Now this is an accounting report because it has debits and credits but even if you don't understand debits and credits it's got the balance sheet on top of the income statement. So it's a great place to go to just look at what has happened drill down on the activity in one place without all those subtotals kind of getting in the way. So we're going to add some more transactions in the future so we will add some of these in the recognized transactions in the future and notice again our strategies to look at the ones that are easiest to enter most of the times and then when I go back to the homepage think about those transactions that are going to be more complex where the bank feeds may not be enough to do it on its own.