 QuickBooks Desktop 2023 Budgeting Overview Let's do it within 2-its 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 then 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, get great guitars practice file going through the setup process. We're going to do every time Maximize on the homepage to the gray area and the view drop down. Noting we got the hide icon bar open windows list checked off open windows open on the left hand side. We're going to open up the major financial statement reports that being the balance sheet and income statement reports drop down company and financial. Let's take a look at the profit and loss the P and L. I'm going to change the range here for the two months that have activity in it. That being 010123 to 022823 in our practice problem. I'm going to change it from the total here to a month by month comparison. So we'll break this down month by month. So we've got January February and then the total for those two month time frame or period. Let's customize it up top and then I'm going to increase the size to let's bring it up to like 1414. Okay. Yes. And okay. Let's also open up the balance sheet. The other primary report financial statement report that is reports drop down. We're going to go then to the company financial this time the balance sheet standard. I'm going to customize first and then change the date range going from 010123 to 022823. I'm going to make it from totals to months again so we could see both months and OK. Well not OK yet. Hold on a second. Let's go to the fonts and numbers while we are here changing the font. Let's bring it up to 14 to match what we did on the P and L profit and loss. Now we're going to say OK. There we have it. So next we want to be considering the budgeting process. So first let's just locate where the installation of the budget will be and the reports related to them. And then we'll talk more about when you might create a budget and how the budget kind of fits in with the accounting process and accounting department. So let's go up top and say OK. The budget can be found by going to the company drop down and then you're going to go into planning and budgeting. It's set up a budget from here. If I go into the set up budget gives me basically a little widget to help me set up a budget. Now in here we do have the profit and loss. We've got the balance sheet will actually start up the budget in a future presentation. But for now I just want to show that process and how you would start the budgeting process. And then we're going to have a data input field from that point. Once the budget is in place then you'll have reports which is the other side of things that can be found in the reports drop down and we can go down to the budgets. And we've got the budget reports the budget overview and the budget versus actual those being the primary two reports. So now now that we know kind of where those things are located for the data input and the reports let's consider when the budget would be in place how it fits in with the accounting department. So first thing to note is that budgeting in general is not just something that an accountant would do like automatically or if you're like doing bookkeeping for a customer then you wouldn't assume that you're just going to be doing budgeting automatically because the budgeting process is going to require some input from the management of the company beyond just the financial statement reporting in order to make projections into the future. So that's the first thing to note if you're doing bookkeeping the budgeting would be an added kind of piece that you might take on. But accounting in general is thought of as taking the past data the stuff that has already happened the stuff that we don't have any kind of question about it's not like there's uncertainty about it. And then reporting that in accordance with some rules or regulations in accordance with generally accepted accounting principles accrual principles or tax or cash basis however it is that we're entering that data into the system. And we'll be doing that of course with our forms here on the home page and that will then be used to create the major financial statements balance sheet and income statement as well as the subsidiary type of reports. So the accounting process is there to get those financial statements reports made from past data and to do the day to day routine activities such as collections and whatnot if you're involved in that kind of stuff as the time passes. The budgeting process of course is looking into the future. Now one of the primary tools that you have to look into the future is to take the past data. So clearly the past data is going to be important. Clearly accounting concepts are going to be important because you're going to need the accounting concepts to build the budget because the future budget will look like a budgeted financial statement balance sheet and income statement. So you're going to need that information but you can't do it basically by yourself. So an accountant for example could create a speculative budget on nothing else rather than past performance but that's not really the best budget that you want to be doing. What you want to do is take the past performance use it first as a tool a guideline and then make any changes that you're going to make which means you're going to need management in the business and if you if it's your business then you got to be thinking about what you're going to do in the future. Changes such as are we going to increase advertising? What's the economic environment going to look like? Are we going to decrease advertising? Are we going to add another department? Are we going to remove a department? Are we going to change the prices of stuff and what kind of changes are those things going to have on our projective incomes going forward because the whole point of making those changes is to try to think about what's going to be the result of those changes on future performance. Once we have that information in place then we can put it into QuickBooks. What QuickBooks is good at doing then is taking that information and making reports with it which means we're now can run reports such as budget versus actual as time has passed. So the general process that you might do with a budgeting process is say hey I'm an accountant, I'm on the accounting department, I'm doing the bookkeeping stuff. If I'm working with someone who's in a business or as a bookkeeper for a business I need the person that's making future decisions to help us determine things about the budget. And so then what I can do is take the past performance on the income statement or possibly with a trial balance, export it maybe to Excel, that's what I would do typically, and then make a budget out of past performance and then adjust that budget for any changes that we are thinking are going to happen in the future. The easiest way to kind of think about your baseline budget would be to take last year's income statement stuff typically because the profit and loss report is the performance report. So the first thing we think about with budgeting usually is what's the performance we're going to do in the future. It's kind of like if I was trying to see how far I can drive in a day. That means well I'm going to reset the odometer on day two and see if I can basically get further than I did in day one. That's what the income statement is. It's going to reset. We're going to see how far we can go say in a month or in a year. So we can take last year's performance and I can divide it by 12 on each line item for example and say this is basically my average performance on a monthly basis. That would be like the starting point of a budget and then we can try to get into more detail about what changes are going to happen going forward. And then once you have it mapped out in Excel then I would import it into QuickBooks using your data input and then the budget and planning and the company dropdown here making a budget which is just data inputting it into the system. The reason you want it in QuickBooks and not just in Excel is because QuickBooks can then run these nice reports as time passes the budget reports which are going to be where are the budget reports the budget reports. There they are. And so they have these budget versus actual reports. So as time passes then we can make these comparative reports which QuickBooks does quite well. So also just know you can get way into a lot more detail on the budget because the balance sheet for example shows where we stand at a point in time. So if you look at the balance sheet before the year begins. So if we were looking at the current year of 2023 and I looked at the balance sheet as of the end of last year 1231-22 that's where we currently stand. The income statement in essence is like the performance statement. So that's the one we're thinking how far are we going to go. That's where our focus is on. But then the balance sheet is going to show us where we stand after the performance. So if I'm looking at January 1st 2023 where do we stand after that time frame had passed. The balance sheet is a little bit more difficult to construct. You know to kind of think about how where are you going to end up at the end of the period. There's a lot of different methods that we can get into more detail with budgeting. We get into managerial accounting to talk more about that kind of stuff. If you want to dive into different kinds of budgets in more detail. We also have some issues with the budgets in regards to the profit and loss. For example could be on an accrual basis versus a cash basis. So we could have an accrual based budget and then we might want a cash based budget right. And so you could have differences in that kind of stuff with regards to budgeting so we can drive we could dive way deeper into a rabbit hole on budgeting in general. We won't focus on that mainly here. Our focus mainly here will be what's the role of the accounting department. What's the general process for creating a budget. We'll think about exporting the information so that we can construct the budget like in Excel. And then importing that data back into QuickBooks so that we can use it to generate reports to hopefully improve performance in the future and then continue the process over and over again. So that's what we'll dive into in future presentations.