 QuickBooks Online 2022, add new accounts and opening balances. Get ready because it's go time with QuickBooks Online 2022. Here we are in our Gig Ray Guitars practice file that we set up with a 30-day free trial holding control, scrolling up just a bit to get to that 1-2-5%. We're currently in the homepage or the Get Things Done page. We're also in the business view if you wanted to change to the accounting view, which you can do by going to the cog up top, scrolling down to the accounting view, which we'll probably do as we go through this presentation because there are some areas where I believe the accounting view is better suited for entering some of these beginning balances, at least at this point. And we'll also toggle back and forth to the sample company file just so you can see the differences in the accounting view over here as well. So back on over to our Get Great Guitars, we're setting up the beginning balances so that we can enter the transactions as easily as possible. Transactions usually being facilitated with the plus button up top, entering things like invoices, bills, expenses checks, and so on and so forth, or else found in the centers on the left-hand side. We set up the chart of accounts. We're going to continue to add some items to the chart of accounts now and enter some of the foundational items such as items themselves, inventory, service items, and the beginning balances from the prior software. So we're imagining these to be the beginning balances from the prior software. We're starting the current timeframe as of January 1st, 2022. So we have a full year in the current period. And so this is as of 12-31-21 of the prior period. Imagining we have some activity that has already happened. Imagining here from an accounting software prior to this, but you can imagine a similar situation just in terms of you just started business and don't have a formal accounting software prior to that point that you're entering the beginning balances for. So in any case, we're scrolling down here. We've been entering some of the more difficult items, which were the, we already entered the accounts receivable. It being more difficult because it has a sub-ledger inventory, more difficult because it have a sub-ledger if you're tracking it within the system. And we have the accounts table a little bit more difficult because it has a sub-ledger that's breaking things out or sub-report. You can think of it as breaking things out by vendor, by customer for the accounts receivable by inventory items for the inventory. Now we're going to enter some of the other ones which are a little bit easier to enter into because they don't have as much detail on the sub-accounts starting with the checking account. First thing to note with the checking account is you might attach the bank feeds related to it and note that we'll talk about bank feeds in a whole other section. You first want to think about how the accounting system works and then you think about how to fit the bank feeds into it. And then you also could have a situation with your first bank reconciliation as well because note that this $25,000 here may not represent the amount that's in the bank as of $1231.21 because you might have outstanding checks and deposits as of that point in time. We'll have to deal with that but we'll deal with that at a later point. We need the $25,000 in at this point because we want to be in balance on down below. So we'll deal with that bank reconciliation issue when we get to the bank reconciliation part of the problem. Right now we're trying to get these beginning balances just in place and ready to go. But anytime you enter something into the checking account just remember it's going to have an impact on the bank reconciliation which are going to be important and we will be dealing with at a later point. So let's go back in here. Now first again this business view that we're in right now toggling between the business and the accounting view is not really ideal for some of these beginning entries. I think they're trying to make it so they're trying to help out people by using very simplified language and restricting some options that you have with adding accounts which to me makes it more complicated. But let me show you what I mean on that. So I'm going to go back on over to our chart of accounts which is in the bookkeeping area on the left hand side. If you were in the accounting view it would be in the accounting on the left hand side. And then we can go in and say okay let's add our checking account. I'm going to close up the hamburger and normally you might go into here and edit this account and see if you can enter beginning balances because that's one way QuickBooks often allows you to kind of enter these beginning balances in place. You can also just enter a journal entry but you could go into the edit field. So they've got the cash account up top with the name and then the cash on hand. Now this account type doesn't really affect too much the way the account is functioning so if you have the checking account or the cash on hand it'll function in a similar way but it's going to display in this detail type here. And they do give you the starting date and opening balances, more information on opening balances here and then the cash the business keeps on hand and so forth for the description. So they give you the capacity for this opening balance information. Let me close this back out and take a look at one other one such as a fixed asset type of account down here just to take a look at it in this business view and then we're going to switch over to the accounting view to contrast it. So if I go back on over and I edit this one, drop down and edit then this one looks a lot more kind of truncated to me, right? It gives you just these two items. It doesn't give you a lot of detail on the entering or the adjusting of this data just gives you the name up top which seems like very limited to me. And you can also, if I hit the new button up top and I add a new account, the looking feel of adding the new account, I won't add it but it looks a little bit different than I am accustomed to. We select the category here and their categories are quite, again, they're kind of making it more of a simple terminology. For example, fixed assets, they're calling expense items asset loan item assets instead of furniture and a fixture or I'm sorry instead of fixed assets property, plants, equipment or depreciable assets. They don't have anything related to accumulated depreciation here. And so if I was to select that then and then they have you basically picking a sub account as well. So it looks a lot different and I think you have less control over it here and they're trying to give more guidance and more restrictions in order to kind of guide people that possibly don't know as much about the accounting system. But that's not what you really want when you're setting up the beginning balances. So let's take a look at the difference if I was to switch this for the cog up top to the accounting view which is what I would recommend doing here and I kind of prefer the accounting view in general but I'm going to try to use the business view and toggle back and forth just so we can get a look and feel for it because again, QuickBooks might merge these two things together or something like that. We don't know what they're going to do. It depends on what's popular. So let's close this hamburger up top. So now if I went into, for example, the cash account and I edited this account, you have a more traditional kind of look and feel. It's going to be a bank type of account, the cash detail account here, the cash. This to me is much more familiar of a layout to me. So then if I was to go down and look at the same thing down in this furniture and equipment type of account and edit this account, then again, now I have the capacity to change the account type which they actually give me the account types to do it without this kind of, you know, walk through interview kind of process thing that they're trying to do and the furniture and fixtures. So this, again, looks a lot, a lot better to me. So I'm going to close this one back out. And so and then if I was to add a new account and say I just want to add like a new account again, it gives me all the options in one place without kind of clicking through an interview process to add an account, which again, to me, that is way, way better. So in any case, so that's what we'll do here. So if I go into the checking account now, if I was to say I could enter the beginning balance by going into the register. And that to me is just as easy as a type of thing to do is to go into here and then enter the dropdown and enter a journal entry for the beginning balance because that's all the QuickBooks is basically going to do or you can enter a deposit for it. But let's use their beginning balance kind of system to do it when we can. So we're going to go into here and say hit the dropdown. I'm going to edit this account and then I'm going to go down here and say that they want and note. We also could change the name if we wanted to from cash to the checking account or something like that. You can change this to the checking account if you if you wanted to for the sub account. This doesn't do too much the sub account here in terms of how it acts. And this I'm going to this description. I can just remove the description here and then I'm going to say down below. We want more info on the opening balance. No, I don't want more info on it. We're going to choose an opening balance beginning of this year. So I'll say beginning of this year. Okay, and let's do other. Let's see if I can do other back here and say I want this one as of last period just to make sure they don't put something in the current the current period. And then what was your account balance on 12 30 21. And then finally I can put in the 25,000 here 25,000 and save it and close it changing the type or detail of the count may affect your accounting and reporting. Are you sure you want to do this. I'm going to say yes. And so there is our beginning balance here. There's the 25,000. If I go into the register. There it is. They entered it in as a deposit type form, which makes sense because it's an increase to the checking account. Let's check it out on our reports, right click on the tab up top. I'm going to duplicate that tab. I'm going to go back to the tab to the left, right click it on it again, duplicate it again, back to the tab to the left, right click on it again, duplicate it again. We're going to be opening up the balance sheet, the income statement or profit and loss and then a trial balance. We're in the accounting look of the view now, which means the reports are on the left hand side, which also to me is a lot more straightforward. And it's just something I'm used to possibly. I mean, I'm not trying to criticize too much the business view, but it's not my preferred. It's not my preferred view. But in the case, I'm going to go up top and change the range up top from 0 1 0 1 2 1 2 12 31 2 1 and run it going to close the hamburger. And then let's go to the tab to the right and open up the income statement reports on the left hand side. And then we're going to go into the profit and loss report. Let's do a range change on that up top from 0 1 0 1 2 1 2 12 31 2 1 and run that close up the hamburger. Let's do the trial balance to the right, go into the right and go into the reports over there as well and type in the trustee trial balance and check that I'm just going to type it in there to find that one. And so there it is and do a range change up there from 0 1 0 1 2 1 2 12 31 2 1 and run that report. So if I go back to the first tab, we can see that they entered the deposit for the 25,000 on the balance sheet. If I drill down on that going back to the source document, we got the deposit here. They used a deposit form. So if I drill down on that, it's actually going to take me to a deposit type of form. That's what they use with that beginning balance. So you can see that the system is going to use whatever form looks appropriate when they enter these beginning balances typically with relation to the type of account. We're using an increase to the checking account would be a deposit type form. If I go down to the bottom, they put the other side, I believe into opening balance equity, which we'll have to clean out later, but there's the deposit right there. So that looks like just what we would expect it to be doing. So let's go back up top. Everything looks appropriate thus far. Now let's add the next one. We did the accounts receivable before inventory before let's do these two. These two are related furniture and equipment and accumulated depreciation. Now we'll talk a lot more about how you're going to categorize your fixed assets. What's the best categorization and accumulated depreciation related to it. We just want to enter the beginning balances at this time, but just briefly note that the furniture and equipment has a sub ledger as well. But that sub ledger will typically be oftentimes for small to mid-sized businesses, not in their accounting software, but in the tax software because of the complications related to it. And the fact that you have to have multiple depreciation schedules, one for taxes, typically unless your books are on a tax basis as well. And if not, then you can have a book depreciation schedules, tax depreciation schedules, and possibly multiple kind of tax requirement with depreciation schedules. The tax software therefore is required to do those schedules at least for the tax records. And therefore it usually has the capacity to do it for the books as well. So what you typically want to do is have your list of the equipment, which could be broken out into major groups. You would typically want those major groups to line up with your tax software is what I would recommend doing and then allow the tax software to then calculate the accumulated depreciation and the depreciation expense, which we enter into the system periodically, which we will take a look at when we get to the adjusting entry section of the course. So I'm going to look for an account that's a furniture and a fixture or a fixed asset type of account in our system over here. So I'm going to go back on over. I'm going to go to my chart of accounts up top. So we're in the chart of accounts, which once again in the accounting view is just in accounting and the chart of accounts closed the hamburger. And they gave us all these accounts related to fixed assets. So they're the ones that say fixed asset right here. These are the main account categories. The detail type doesn't do much to change the actual type of the account. It's really the account type that we're focused in on. And so notice that I adjusted this one already. I think it was called before building or something like that. And so I'll show you how to adjust the name of it. But that was not in there by the default. And then they had land. They've got and those two are standard. But then they've got long term office equipment and then these sub accounts under the office equipment, computer tablets, computers. And I think what they're trying to do here is show people these are the types of things that you might need to capitalize. And if they didn't show you that they're thinking maybe you would have just expensed them. But I don't think that's you really need to break out this much detail. You know, in this category, you might want to put them into categories again that line up with your tax preparer and the tax software. So I would talk to your tax professional to see what is the best strategy for setting up your fixed asset type of accounts in accordance with their software to make the posting of depreciation as easy as possible. Then they've got the tools down here and the vehicles down here. So I'm going to make our category for now to line up to what we have in our system. I changed this one and the way I changed it and notice I got the detail category still here. That detail category doesn't mean too much, but we're going to edit the dropdown and edit it. And I can just type in up top. I want it to be a fixed asset, the detailed category. We can change to fixed fixed asset, possibly furniture down here. I'm going to call it furniture and equipment, which is actually the name that I want to be displayed. And then the description, I'm not going to have a description or you can just put the same item here. It's not a required field. Notice it doesn't give us the balance down here to enter the beginning balance directly into the system here. And that's really okay because you can enter it with a journal entry just as easily as it might even be better to do that way. So what I'm going to do is I'm going to save it and close it. And I changed it. I'm going to say, yeah, I'm going to change it. I'm okay with that. And then I'm going to go down and hit and enter a activity into it. So we'll go down here into the fixed asset. What did it go? Where did it go? There it is. And then I'm going to go right into the register. This works like a like the check register, but now we're in the fixed asset register. We hit the dropdown. Notice we don't have a lot of different types of forms we can use here. This is going to be a truncated type of form that has just a bare minimum fields in a register format. So we're going to enter a journal entry. And we're going to say this is as of 123121 into the prior period. I'll keep that number. That's fine. Whatever that generates, it might be a one for you. I'll keep that there. We're going to say the memo is going to be, let's call it the beginning balance. And it's going to be an increase of the 75,000. I think it was 75. That's what it was. Yeah, it is what it was. I know what I'm talking about. And then the other side, they've been putting everything into opening balance equity. We can keep with that routine or we can put it into basically the retained earnings account, which is ultimately where it's where it's going to end up in any case. So you could find these accounts here. You would think there would be an order of assets, liabilities, equity, but they try to put the expenses up top because again, they're trying to help you out because those are usually the ones you would go to first. So we could put it into opening balance equity. I'm going to put it into just retained earnings though. And I also want to show you kind of some little little finicky thing with retained earnings as well. So I'm going to go ahead and increase that. I'm going to say let's post it. So there it is. And then I'm going to go back to my balance sheet, back to my balance sheet, got to refresh it. I'm going to run it again, run it to refresh it. So I'm working on fresh reports here. I don't work on stale old reports. They have to be fresh. And then we're going to go into the furniture and fixture. There's the 75,000. If I was to click on it, notice it's a journal entry type form taking us back to the source document. It doesn't take us to the register, but to a journal entry type of form. I'm going to copy the description and put that on down below. Let's go ahead and save it and close it. Save it and close it. And then I'm going to go back to my report. Nothing's on the income statement. Now the other side I put to retained earnings because it's the beginning balances. And I'm going to have to do a journal entry from opening balance to retained earnings after this is all said and done. But notice it doesn't let me click on retained earnings. And part of that is because the net income rolls into the retained earnings. So it's not really the same format of an account, but it would be nice if you could see the detail. And if you're working in an accounting office, you will need to see the detail if anything is posted to it. So one way you could do that, if I go, let's go to the last tab and make another one. I'm going to right click and duplicate again. And let's open up another report, which is just going to be the general ledger report, which should give us our stuff. Here's going to be the reports on the left hand side. I'm telling you this view is way better to me, but I've worked in it for a long period of time. I'm not being fair to the business view. It's, it's, it's crap. I'm okay. It's not, I don't, trial balance. Okay. We're going to go into the trial balance here. Actually, no, that's not where I'm going. Let's go back. I got getting a little, here we go. This is going to be the general ledger, general ledger. All right. And then we're going to change the range up top from 0101212123121 and run that report. And then if I scroll down to the retained earnings, we see the activity for the retained earnings here. So that's one way you can kind of see that activity, which is nice. So let's go back to the first tab again, and let's go back to our chart of accounts. And then let's go back to our next item. So we got the accumulated depreciation that represents us allocating the cost to the useful life of the assets were decreasing the assets. It's a contra asset account, one that is often most confused when you do the data input because it's an asset with a credit balance or a negative asset. You can think of it in essence. So again, I won't get into the detail of what it, you know, the accounting theory behind it, but even a cash basis business has to deal with it typically. So we got to deal with it. I'm just going to put the beginning balance in place now. So I don't have another account called accumulated depreciation here as we saw. So I'm just going to add one. So I'm going to add one up top new. And again, I'm in the accounting view, which has a different experience as they say, which is a way better one in my opinion because I was extremely frustrated. And so I'm going to go down to the banking drop down and then go to the fixed assets here and then accumulated amortization. It should be accumulated depreciation. But again, the sub account doesn't matter too much in terms of how the accounts going to work. If at all, I don't believe at all. And then the account accumulated depreciation. That's what we want. We could have an accumulated depreciation per kind of asset account for each type of fixed asset account. But we'll talk more about that later. We only have one in our beginning balances. So that's what we will do here. And then we have a sub a sub account. No, I'm not going to add a sub account yet. When do you want to start tracking your books? We're going to say then that. So let's see if we can use their opening balance thing. Again, I'm going to say other just to make sure I got the date here that I want, which is December 30th of the prior year 2021. That's not November. Hold on a second. This should be, I'm going to say 1231. Select a date. We'll start tracking. What was your account balance on 1231 1231. It says 1230 1230. No, that's not what I'm going to. I'm going to close it back out and go back into it new. And then I'm going to say this is going to be a fixed asset. This is going to be accumulated depreciation. And then I'm going to choose my own date here, which is going to be 1231. And there we have it. So then what was your account balance? It was at the 75. This one's a little tricky because I would think it would be 7500 a positive contra asset number. But I think this will actually be wrong because they want a negative because it's a negative asset account. But I'm going to do this and show us how to fix it. So you can, if you get it going the wrong way, then we'll just fix it. So I'm going to save it and close it. Say, is that right? Did I put that on the right way for the debits and credits for what they want here? And I'm going to go down and say there's my, there's my cumulative depreciation. And they did put it in as a negative 7500. I think that's what we want. So if I go then back up to my, to my balance sheet, let's check it out up here and run it again to freshen it up, freshen it up. And we're going to say then here that it did do it. So it put it in as a negative and the, and we should have the difference between the two. So it looks good. If I go into it by drilling down on it, it made a journal entry for it. Let's drill down on the journal entry. And then there it is. There it is. Looks good. Looks good. Closing that back out, scrolling back up. We're going to go back then to our, our account. The other side, I believe they put into opening balance equity. So that's fine. We'll fix that at the end with they did that with a journal entry right there as of the proper date. So good. Okay. So now we're going to go back on over and let's do the next one. What else do we have? We did those two accounts payable. We did before the visa is going to be a credit card. So that should be a straightforward beginning bounce. Note that the visa account, you can also connect to bank feeds often, but we're not, we'll deal with that in the bank feed section. So let's see if they gave us a credit card type of account down here that it would be in the liability section. So fixed asset, then we've got the liabilities. I don't see a credit card specific credit card type of accounts. So let's just add one. I'm going to say a new account. This is going to be a credit card type special liability credit card. We'll just call it credit card. And again, we'll try to do their use their beginning balance thing. You would only use this by the way when you enter the these beginning balances. So we're going to use their thing. And then this is going to be as of the end of last year. And this one has in it $1,000, which would be positive. It's a liability. So I would think it would be a positive liability number. A positive bad thing, a positive liability, a credit, in other words, save it and close it. And then let's check it out. So if I go down here, it should add it to my chart of accounts. It should be down here in the liabilities credit card, boom, balance sheet back to the balance sheet, freshening up my report, running it again to do so. So I work with the fresh report, scrolling down. There's our credit card drilling down on it. It did it with a credit card expense. That makes sense. It might put the other side to an income statement account then. If I know it will split to opening balance equity. So put the other side to opening balance equity still. Let's go into it. There it is. It used an expense form this time instead of a journal entry. That would make sense because it's a credit card transaction. We're going to go back then to our summary. Did it really put the other side to opening balance equity? Let's check that out. $1,000 in here or did it put it on the income statement? I'm okay either way. But there it is. It's on opening balance equity, no impact on the income statement. What else do we got? What else do we got? We got a loan payable 22,000. Let's put that one in place. This is the last one, people. And then we have to stop this because that's all the ones we have, even though this is great times scrolling down. We've got the liability. Now I would put this in as a current liability. I'm going to put it in as a current liability and break out the long-term portion periodically. That's another thing I'll talk about more later, but you might have a short-term and long-term portion of a loan. So I would set it up as current portion in general and then break out the long-term portion periodically with adjusting entries typically. But they've got a long-term loan short-term business loan. So let's do that short-term business loans. Let's rename it to the name that we're using here right now, which is just loan payables. So let's go down and say, down here, loan payables. So where did it go? My liabilities, liabilities. So let's do this one here. This is other current liabilities. Let's go ahead and edit that one. And let's just call it loans payable. Payable. We know it's short-term because it's a current. It's an other current liability. And a loan payable, that's fine. Description fine doesn't really do much. And then we'll enter the beginning balance and other again and say this is going to be the end of last month. And the beginning balance here was 22,000, a positive liability. Account. So I believe that would be a positive number in this thing. And save it and close it. And then we'll check it out. Save it and close it and then checking it out. And so we're going to go down. So there it is. That looks good. Let's go back to the balance sheet. Back to the balance sheet and run it again. Run it. Scroll it up. And now we've got this liability account here. And then we've got the loan payable. We're going to go into the loan payable. And we've got our opening balance, which was entered with a journal entry because there's no form that's directly related or tied to a loan payable. There's our journal entry. Looks good. Let's close this out. Let's go back on up, back to our summary. Scroll back down. The other side's inequity, I would believe. It's inequity. Opening balance for the $22,000 on the loan, right? The loan, is that what it was for? $22,000? Yes. Yes, it was. So let's scroll back on up top and go back now. Now, if I do the side-by-side here and we say, let me take a look at a side-by-side comparison. Hold on a second. Wait a second. If I do this over here. Side-by-side comparison. We've got then the assets of cash, $25,000, $25,000, and a $20,005 for the accounts receivable, $20,005. The inventories at the $28,996, $28,996. We've got the furniture and fixture at the $75,000, $75,000 for the accumulated depreciation, and then if I wanted to just kind of check my total asset numbers just for a double check on this, pulling out the trustee calculator to do so and do some trustee calculation with it, we've got the $25,000 plus the $20,005 plus the $28,996 plus, let's say minus the $750,000 plus the $75,000, it's going to give us the $1,5896. That looks good. The accounts payables at the $15,000, Visa at the $1,000, loan payable at the $22,000, and then the equity is split up between these different equity areas, but the total equity ties out to the $77,896, which is all we want to have. So we did this one account at a time, other side going to equity in some way, shape, or form, whether it be to the income statement, which rolls into the retained earnings or directly into the opening balance equity. Now all we need to do is adjust the opening balance equity to whatever format is best suited for us, for us sole proprietorship. That's one account which we can call retained earnings. We might want to adjust the name to like owner's equity or something like that, which would be more appropriate for us sole proprietorship, which we'll do next time.