 Zero Accounting Software 2023 Organized Fixed Asset Account Categories Get ready to become an Accounting 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 20TB USB 3.0 Desktop External Hard Drive We usually 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 given 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. Here we are in our Custom Zero homepage going into the company file we set up in a prior presentation, Get Great Guitars. We're going to duplicate some tabs to put reports in like we do every time, right click on the tab to do so, duplicate that is, right click on the tab up top to once again duplicate. Back to the tab to the middle, Accounting drop down to open the balance sheet, but we are now opening up the custom balance sheet we made. If you don't have a custom balance sheet, you could just open the normal balance sheet, but the customization we put in place is that grouping we had down here for the liability accounts. Tapping to the right we're going to open the income statement accounting drop down, but the custom income statement, which is a comparative income statement comparing the current month we are working on February to the prior month we already did January. Let's go back to the tab to the left and scroll on up the date looks good to go. So now we're going to go to thinking about our accounts for our depreciation. So I'm going to go to the first tab here and let's go into our chart of accounts by going to the accounting drop down and then scrolling down to our chart of accounts. Within the chart of accounts zero has this nice system of breaking out each category so I can kind of see less accounts. I'm going to go into the asset category because we're going to be focusing in on our fixed asset type of accounts which are categorized over here. Now note when you first set up your accounting system within zero, I think zero is better than some other accounting softwares at not overloading you with too many accounts in a generic chart of accounts. So when we first set up the system, unlike say QuickBooks Online, which gives you a whole bunch of say fixed asset type of accounts which are designed to kind of accommodate every single kind of situation. Zero has less in terms of the chart of accounts when you first make up an accounting system which I think is good because that allows you to kind of do more of your own customization and not have to delete accounts. Now we want to focus on kind of formatting these fixed asset accounts. Now let's go to the balance sheet here to kind of think through this. If I go to my fixed assets down below we only have one category of fixed assets at this point called furniture and equipment. And then we've got the depreciation which is related to that fixed asset. So quick recap on the fixed assets. When we buy the fixed assets as we saw in the prior presentation, we do not put them on the books as an expense even if we're on a cash based system, but instead have to do an accrual thing if you're in the United States. You have to do so for taxes, if nothing else, putting it on the books as an asset and then expensing it with depreciation which we will do periodically. Now in the United States oftentimes the tax code is going to force us to do this for our income tax reporting and therefore it's useful for us to track the depreciation schedules in another software, the tax software, which has to do at least the tax depreciation calculations and can then also do the book depreciations if we want to depreciate separately for the book side of things. That means that what we want to have on our categories typically is a categorization that matches whatever our sub ledger is going to look like. So if we're using external software for the sub ledger, we would like to ask and if it's our CPA firm or our tax firm, what are the sub ledger accounts that are in the software so that we can have the same grouping in our system. So in this case we have furniture and fixture, machinery and equipment and then automobiles and vehicles and whatnot, but these are the two categories that line up to what we are doing at this point in time. So what we have on our system is furniture and equipment kind of grouped together. Now we could do that, we can group them all into one kind of big category and even though the tax software is going to kind of break it out into two categories. But I think oftentimes the easiest thing to do is to use the broad category ranges that are going to be the same as what is on the sub ledger. So what I'd like to do here then is I'm going to break out our furniture and equipment to these two categories furniture and fixture and then machinery. And then I'll break out the items that are in each category to match out the 98000 the 5000 and then we have the accumulated depreciation that we're going to be calculating as well. So each of these categories we could have a separate accumulated depreciation account per category, which is something I would I think would be standard, or we could have a one accumulated depreciation account for all of the fixed asset categories. So what I'm going to do is I'm going to break out two fixed asset accounts, allocate this out between the two accounts with a journal entry and then make accumulated depreciation accounts. Now if you've used like QuickBooks online, they use sub accounts to do this. We're not going to do sub accounts, but rather do something similar to what we did here with the loan breakout have that parent account to give us that more detail over here on the fixed assets. All right, so let's go back on over to the first tab to see how this will be structured. And I'm going to first adjust the name for this one. So I'm going to go into this thing here. It's going to be a fixed asset 1520, but I'm just going to call this one furniture and fixtures. So say furniture instead of the end equipment will say fixtures furniture and fixtures. Okay, so I'll save that one. And then I'm going to make another one called equipment. So the equipment. So this is furniture and fixtures. And that's going to be 1520. So maybe 1525, let's say will be will be the will be the equipment 1525. So I'm going to say, all right, add a new one, add an account up top. And we're going to say, oh, what happened here? That's not what I want to do. I'm going to go back. And I want to say add not a bank account, add an account 1525. And it's going to be the account kind is going to be a asset account. It's going to be an asset account, a fixed asset type of account. Okay, boom, save it. It needs to be, I need a name, equipment, focus, focus equipment. All right, so then if I scroll down, now we've got the furniture and fixtures. We've got the accumulated depreciation. Now that accumulated depreciation. I'm going to try to make it a sub account of the furniture and fixtures account. So I'm going to, I'm not going to notice. I'm not doing a sub account in terms of what you might see in QuickBooks online. But when I do my groupings, I'll make it a sub account right here. I want to indicate that it's not accumulated depreciation for everything, but accumulated depreciation related to the furniture and fixtures. And I could say accumulated depreciation and I'll say furniture and fixture. Can't spell it. Sometimes I would abbreviate it ACCD pre sometimes, but it lets me type out the whole thing here and it fits. So I'll keep that for now. And so then this is 1521. So there we have that. And then I need another accumulated depreciation for the equipment, which I'll make account 1520 1526. So I'm going to say add an account 1526. It's going to be a fixed asset. And we're going to call it Accumulated Depreciation Equipment and save it. So now the numbers line up. So we've got furniture and equipment, the accumulated depreciation equipment, the accumulated depreciation and then vehicles if we had vehicles and it's related accumulated depreciation. So that looks good. So now if I go to my balance sheet, what I'd like to be able to do is break those categories out with subcategories. So they're all subcategorized under the fixed assets. But I might want to further break out to have other subcategories, which are grouping together the furniture and equipment and its related depreciation. So if I update this, for example, we see furniture and equipment and its related depreciation. So before I do that, let's go to the first tab and let's make a journal entry that's going to be taking some out of here, 103,000 and pulling it into the equipment, meaning that 5,000 purchase that we just made. We're going to say it's not actually furniture, but it was equipment. So in other words, if I look at my depreciation schedule, I have 98,000 in furniture and fixtures and 5,000 in the machinery and equipment. So I'm going to pull that 5,000 that we just recorded into machinery and equipment. Now I could do that by going into the journal entry and adjusting it in the source entry, but I'm just going to make a journal entry that's going to take it out of furniture and equipment and put it just into the equipment account for 5,000. Okay, so if I go up top, if I hit the drop down, there's not a normal form to do that because this is a normal transaction that happens on a day-to-day basis. Therefore, we use a journal entry. We can find the journal entries by going to the accounting and reports and then we type in the journal, journal report and then within the journal report, we want to have an add journal entry and this is going to be to adjust fixed asset, fixed asset balances to match to match the pre-schedule, something like that. And we'll say this happens. We'll do it at the end of FEB. We'll just do it at the end of FEB here and you might, well, we'll do it at the end of FEB. That's fine. And so the account that we're going to be posting to is the equipment account. Equipment is going to be going up by 5,000 and the other side is going to be the fixed, the furniture and fixtures is going down. Now, if you don't know your debits and credits, you can post it and then you can go back if it's going the wrong way and change it. But it's an equipment, it's an asset account, assets go up with a debit so we're going to increase the equipment with a debit and decrease the furniture and fixtures with a credit. So let's post it and check it out on the balance sheet. Back to the balance sheet, back to balance. That's what my accounting course is going to be called. Back to balance because it's the balance, because that's the double entry accounting balance sheet. But we have the 98,000 here and then we've got the 7,500 and then the equipment is now being broken out. So again, we don't have any depreciation related to this one, but we might want more subcategories. I might want to kind of break these out into their own so they give me the 98 minus the 7,500 which would give me the book value for furniture and equipment and then I can do the same here as well. So I could try to do that with my edit layout groupings here. I can go into my edit layouts and I can say in here I've got the accumulated depreciation. I'm holding down control and I want the fixed assets for the furniture and equipment and I'm going to group those together. Group them together and it gives me this nice grouping and then I'm going to just call this furniture and fixture book value or something like that. The furniture and fixture, the total will be the book value when it totals them up. I think I can actually pull this one down too because it was in alphabetical order but I want the furniture to be on top and this one to be on the bottom. Again, more flexibility to do that than you have in other software like QuickBooks Online. So cool, very cool that you can do that. I'm impressed. So I'm going to hold on the control here and do the same for these two and group those together and then I'll just call this like vehicle even though we don't have any yet in here, I'll say book value or whatever. And so there's those and again I'm going to put the vehicle on top, boom, and then we'll do the same for these two. I'm going to select this one, hold down control and this one and make a group out of those two, group it, group it, man. And so this is going to be equipment, book, value, tab. And so that looks good. All right, super flexible, very impressive with this layout format. More flexibility than the chief rival, I must say. QuickBooks Online, although possibly it could be a little bit more difficult for the learning curve to master, but there it is. So you've got the fixed assets and then you've got the furniture and fixtures and so there's the book values of 98,000 minus to 75 gives us another subtotal, right? And then we've got the equipment, book value. It only has the equipment in it because we don't have any depreciation yet and then we have the total for the fixed assets down here. And notice within this grouping, I'm able to put the one that starts with an A below the one that starts with an F, which should happen because you want the accumulated depreciation under the furniture and fixtures but with other software you can't do that without adding the account numbers. Oftentimes, if you're using like a normal subsidiary parent kind of relationship kind of system. So flexibility is a plus here. So we have that and so let's go ahead and see if we can save the customization. So I'm going to save it balance sheet customized. I'm going to save it there. So when I open it up again, that should be the one that will be there. Hold on, it went back. No. Did it do it? Yeah, so there it is. So we're still good. So there it is. Mui B to the N, BN. So now our grouping ties out to our sub ledger over here, which is being held externally, the 98,000 to 5,000. We'll get into calculating the depreciation and recording the adjusting entries related to the depreciation in our adjusting entry course or section. For now, let's open up a trustee trial balance and check out our numbers tab into the right. Nothing happened on the income statements. So we'll just go over here. Accounting drop down reports. We need a report, please. And we're going to type in trial balance, the trustee TB. And let's put in the 2023 on the trustee TB for the date up top and update it. So this is where we stand. If your numbers were on last time, last presentation, but they're off this time, then the only changes we made, you would think the ones that would might be off is the furniture and fixture. We made an adjustment to that. We made adjustment to the equipment and we adjusted kind of like the name of the furniture and fixtures. So if something's an issue, you would think that would be it, but change the date range, see if it's a date range thing, and then you can drill down to the source document, make any changes to the source document that need changing.