 QuickBooks Online 2024. Change account categorization to other expense. Get ready and some coffee because we're moving on up with QuickBooks Online 2024. First a word from our sponsor. Yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways like our crunchy numbers is my cardio product line now i'm not saying that subscribing to this channel crunchy numbers with us will make you thin fit and healthy or anything however it does seem like it works for her just saying so subscribe hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine if you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accounting instruction.thinkific.com here we are in our get great guitars 2024 quickbooks online sample company file we set up in a prior presentation opening up the major financial statement reports like we do every time the reports on the left hand side in the favorites right clicking on the balance sheet to open link in a new tab we're going to right click the profit and loss to open link in a new tab same with the trustee trial balance right clicking on it open link in a new tab let's go to that middle tab close up the hamburger and change the range we're going from 010124 to 022824 let's see it on a month by month breakout and run the report and then we'll tab to the right repeat the process close the hamburger change the range from 010124 to 022824 and then we want the month by month breakout and run it again and then we'll tab to the right and repeat the process one last time hamburger is closed 010124 to 022824 if you don't close the hamburger it gets all messy and so we're going to then change it to months and then run it all right let's go to the first tab here then on the balance sheet and now we want to be thinking about the recategorization of some of our accounts so just let's recap our strategy that we have had thus far go into the first tab noting that if we go down to the transactions and then into the chart of accounts I'm going to close up the hamburger our strategy has been that we set up the new company file and then QuickBooks gave us this massive chart of accounts and because they gave us a chart of accounts that could fit many different industries and account types so instead of like removing all of the accounts and starting from scratch as we do our data input or trying to import our own chart of accounts we decided that we're going to use QuickBooks chart of accounts as we do the first couple months of data input use the accounts that are closest to what we think are appropriate as we do the data input and then after two months of data input or so we might go into our chart of accounts and clean it up removing the excess accounts so that when we go forward and do data input we don't have all these accounts that are not being used now the largest category of accounts are typically on the income statement and typically the expense accounts so within the expense accounts for example we have the utilities is always a good example to look at do we want to have a utilities parent account and then a bunch of sub accounts underneath it or do we want to have for example the telephone bill broken out telephone expense in its own account so these are kind of questions that we had and we saw that with that telephone account in particular we basically wanted to pull it out from underneath the utilities subtitle so we had here the utilities the electric and so on and we basically pulled the telephone out from within there so the basic strategy is if there's an account that we can use as we do the first couple months of data input we use it if the account has a different name or has some kind of sub-account strategy that we don't like then we might still use that account but then go into here and adjust the name and only if there's not an account that we could use do we then add a new account and then after a month of data input or a couple months we can go in and clean up all the accounts that we're not using by removing them now another issue that we could have is with the income statement so if I go back on over here to the income statement then we might have some accounts that we want to categorize differently so for example if we had something categorized as income but we think it would be more properly categorized as other income then we can make adjustments like that as well so you'll recall that other income as we saw with the gains on the sale of investment is still an income it's going to be increasing the net income but instead of it being on the top line it is on the bottom line why is that because we want this sub-category of operating income because that's the income of our normal operation the income account we most likely want to use for like budgeting into the future and then the other income we're going to have down here because it's not something that's going to be repetitive into the future now with expense accounts we could have similar items with an expense account so for example the interest expense you could make an argument for interest expense to say I don't want it to be in here in my normal expenses because maybe I would rather have it down here because it's not really part of our operations that's a financing expense so you might put it up here as part of your normal operations but you also might say maybe I'll put it down here into other income and expenses so that's what we will do this time as we do that note that we have an account the sub-category of other income and then we could have another category of other expenses which gets a little bit long of a system you could also say I'm going to just use this other as other income and expenses and if I pull this expenses into this other income category it'll show basically negative income and that way you kind of eliminate two sections so that's what we'll talk about this time first I'm going to adjust this interest paid account because I don't like that it says paid I would rather just say interest or interest expense because paid indicates to me that it's on a cash based system and I would have to actually pay the interest in order to have an interest expense when really that's not the case so I'm going to remove that I'm going to rename it and then I want to move that down here to other expenses and I'll show that in two different strategies one putting it under other income so it'll be a negative kind of other income which will be a shorter statement and then two breaking it out into its own other category other expenses so we have two other categories down below other income and other expenses now note that this category down here we don't expect there to be too many things in here so it's not like it's going to be a long list typically that's why I think having it in one drop down could be useful sometimes all right so let's do that we're going to go to the first tab and let's see if I can find that interest the interest let's see if I could find that all right I found it it was kind of difficult because there's a lot of different accounts now notice what they did here they they did this this a sub account thing which I think they kind of over overused sometimes with the default account so we got the interest paid which is they're seen as a parent account and then the sub accounts business loan interest credit card interest mortgage interest now we're a business if for a business we're not going to have mortgage interest most likely that would be if we're using it for personal purposes these two we could break out separately but we can also just put them oftentimes people put them in the same account of just interest so what I'd like to do is rename this one and I would like to make it an other expense putting it on the bottom of the income statement but I can't move this one as long as there's these sub accounts underneath it because these have to have the same account type as the parent account so I have to remove these accounts in order to make this work so let's go into here I'm going to say let's hit the drop down and edit this account and I really don't even want this account but they won't let me delete it so what I'm going to do is I'm going to try to put it at the bottom of of my statement so I can get it kind of out of the way so I'm going to say other miscellaneous expense let's call it and then I'm going to give it a name of just ZZZ one because I basically want to make it inactive and try to get it basically out of the way and then now it's not a sub account of the interest account right I just put it into the to this hold on a second I want to put it into let me do that again let's put it into other expenses so it'll be at the bottom but it's not a sub account any longer and then the tax form I think I need something I'm just going to choose anything here because I have to have a tax form or won't let me record it and then interest paid on the to do that's fine so I'm just going to say save it so save changes for your tax section okay and so now it moved it way down below so it's not under here anymore is the point I'm just trying to get rid of it and they won't let me delete it so I'm going to edit this one and then let's do it to this one too I'm going to say this is going to go down to let's say let's bring it down to the bottom to other expenses and I'm going to say just give it a tax line and I'm just going to call it ZZZ that's not a Z ZZZ2 and then I'll save that one okay and that is out of here and then one more let's get rid of this one so it's not a sub account and I'm just going to call it to do instead of interest let's put it under down here that one and I'm just going to choose any tax account and then I'm just going to call this ZZZ3 and then save that one so now I have just the interest paid if I go down to the bottom I should see these ZZZ accounts so there is this one I can now make it inactive so I'm going to hit the drop down I'm going to make it inactive if I make it inactive by the way while it is still a sub account it may still restrict me from adjusting the parent account that's why I had to move it away from being a sub account and then make it inactive so I'll make it inactive and then and then go to the next and here's the another one I'm going to make this one inactive make it inactive okay there's that one and so let's go back to my chart of accounts and we have one more to make inactive so I'll hit the drop down here make it inactive make it inactive I'm I don't like this one being active because it does bad things it's a bad actor so make it inactive okay so then the interest paid I'm going to then adjust that one so I'm going to edit it edit that one and I'm just going to call it you could just call it interest or I'm just going to call it interest expense now I think part of the reason they called it interest paid is because they feel like interest expense is redundant because it's already in an expense account so you can't do it again you're repeating yourself it is an expense because it's an expense type of account however some accounts it makes sense to put interest expense because you might have like prepaid interest on the balance sheet or something like that and so so it makes sense even though it's in the expense category to say interest expense because when you're looking at a drop down of your accounts you want to be able to distinguish between interest expense and interest asset or something like that so I still like putting interest expense although some people will say it's improper it's like saying railroad tracks you know you don't have to say tracks because the railroad is on tracks it's assumed you're repeating yourself and and so on but I think that's nonsense it helps to say railroad tracks okay so then I also want to put it in its own category instead of an expense account I want to put it in other expense so I'm going to do it again let's edit it again and then in the category I want to bring it on down to not expense but other expenses so I'm going to go down so we have down here other expenses let's put it into that one and so that and then I'm just going to give it its own a category I'm not concerned so much with the tax category because see if they can I haven't seen the system of just pulling in the tax categories into like tax software like turbo tax work great when you're looking at like a schedule c business meaning you're going to have to still print out the income statement and basically do the data input in some way shape or form into your tax return I've tested it out I haven't seen it work great yet to just kind of pull it over with these tax accounts I'll keep testing it and when I see it work well I will let you know but I'm not I'm not convinced as of yet so we'll say yes and pull it over and then if I scroll down and take a look at it then now it should be in the other expenses where did it go don't day where are you there it is so there's the interest expense k for crying out loud posso that's my spanglish Spanish and English k for crying out loud posso to the interest expense account then let's go to the to the income statement and see where it put it I'll run the income statement and then down here so now you can see that we have these two categories we have the new name of it and then we've got the operating income and then down here we've got other income which was my gains and losses and then other expenses so see how it kind of makes these two two categories which makes sense because you have other income and other expenses however there's only one line item in each one of them and you're not usually going to have a lot of lines in them and it makes another three lines each so to shorten this if you wanted to make it shorter you can just group it possibly into other income it's not income it's an expense but on financial statements oftentimes this category will be condensed to other income expenses meaning income positive expenses negative so if you put everything that you want on the bottom in other income it'll show like that other the income will be positive expenses will be negative if you export this to excel then you can change this header this header line as well quite easily if you wanted to do that you change it to other other income and expenses by the way you have an ability to do some of that up here as well where it says edit titles so then if you want to say I want to put it in other but instead of calling it just other income you can call it other income and and the negative numbers will be expenses and you can put brackets around them to make them negative and so saving changes this could take a minute so that that takes a little while for it to basically refresh that but you might be able to do that and that would be nice as well so let's shape and let's make that change to look see what it looks like let's go back to the first tab and let's find that don't a interest expense where are you and then we'll edit it again but this time we're going to change it to an income account and then I'm going to say it's going to be a not normal income but other income I'll just put it under other income and then again I'm not too concerned with the tax account because and then interest expense will be the name and let's save that okay and we'll save it notice it's going to change everything retroactively so it's not like it's going to throw off your double entry accounting system so if I go back on over here and run it again and then go down so now now I have just one category look at it changed it that's cool because it because I was skeptical that you can do that without exporting it to excel so now I've got this category of other income and expenses and I've got the gains and on sale as the income and then the expenses on the loss and if you were to format this I could put my brackets around it customizing it and then put the brackets and make it red boom and so now you can clearly see that that's going to be a subtraction for the other income and loss so that's I think that's my preferred way to do it even though the category here there is a category for other expenses but this one this one puts it nicely into into one spot but I'm going to bring it back to the other way just because that's the that's the you know default 70 for other income and expenses and again notice that some you might argue that the interest income shouldn't be down here I'm just kind of using that as an example and you could argue that it could because again you don't want to you want to see your net profit without the financing charge because if I had the finance if I had the money to finance the purchase of the equipment I wouldn't have interest expense that's the argument for putting it down here once I get the money to pay off the loan this will go away it's not really part of my operations it's just part of financing but the other argument would be well you have to have financing in order to buy the equipment so it is part of the normal business operations and therefore should be up top right but other type of of these expenses anything that you don't expect that's going to be happening from period to period then then are one time things like you had a like a tornado hit your hit your place or something like that or some looters some looters hit it or something that's probably more of a reoccurring thing these days I live in in California so that's can't really get you got a budget for that kind of thing but in any case let's go back let's put it back to where it was and then say this is going to be right looters stealing your inventory is not a one-time occurrence where I'm at I tell you that tell you that right now but it is what it is got a budget for these kind of things we're going to say edit it and then we're going to say let's put this back to expenses select the drop down and we're going to go into other other other expenses let's put it back into other expenses and then boom and then I'll just put it into I'll just put it there and then we're going to say interest expense okay back to the interest expense yes and then if I go back to my income statement we're back to the long format so now we've got it broken out into the other income and then other expenses and now I'll get rid of this income and expenses thing because that's no longer applicable so I'm going to go up top and then edit and then this one I really like that you can do that you didn't you haven't always been able to have the power to do that but then they gave you the power like they gave you like he means he man sword so you've got the power of gray skull and you can I don't know what what are you talking about I don't know but in any case there it is so so so that's the process so let's open up we haven't really done anything different to the trial balance but we just moved an account and the bottom line is oftentimes if you need to move an account it can be a kind of scary because you're like okay what am I going to do I had that interest up here and I want to move it down here now but if I change it I'm moving the whole category and I've already posted things to it but typically QuickBooks is quite good at that meaning you can move things within the income statement you saw that we moved it from an expense to other expense we even changed it from an expense to an income account no problem it retroactively changed everything which isn't a problem because the debits and credits are still the same it's just now categorizing it in a different category and it just flips everything into that category now if you were to change something from an income statement account entirely to like a balance sheet account for example like you changed prepaid let's say you you posted stuff to the the insurance expense and then decided that you wanted to make the insurance expense prepaid insurance I think you could still basically be able to do that because it's still just the debits and credits so if you wanted to move out move it over to prepaid insurance and you have this as an expense account then it'll basically pull it over here but that will have of course an impact on your income statement because because now the expense will no will no longer be there but it shouldn't really throw you out of balance and if it would throw you out of balance QuickBooks is usually pretty good at not letting you do it right that's why a lot of people get frustrated with accounting software in general because they find certain things that they can't do but the reason they can't do it is because the software is saying if you do that you're going to mess up the double entry accounting system your balance sheet will not balance and they won't let you do it so so you can be you could if you change the account you're usually pretty good and you're not going to really have a problem and those accounts where you will have a problem for example if you tried to change the accounts receivable QuickBooks will probably not let you do it right because it has a sub ledger and it won't let you make that change if you change something into a checking account then you're going to have a problem you can't change like a an expense account to a checking account because the checking account has a special sub ledger and so QuickBooks will most likely say no we're not going to let you do that stupid why because because i'm just you're not stupid but like it wouldn't let me do it they would call me stupid too and i'd be like oh okay you're right QuickBooks because i was being stupid so but in the case there it is let's go let's go to our trial balance and see where we stand at this point so we have our our assets liabilities equity income and expense if your numbers tie out to these that's great if not then change the date see if it's a date range issue we didn't change any numbers we just changed the categorization so we've got the balance sheet account assets check-ins and asset accounts receivables and asset inventories and asset investments asset payments to deposit asset prepaid insurance asset accumulated depreciation contra asset furniture and equipment asset these are all what we own what we have in the business who has claimed to those assets well third party liability starting with accounts payable credit card company the government for taxes the government for payroll taxes dang government and then we've got the equity section where we have claimed to our own assets these this is our claim to them with the owner's investment and then the owner's equity and then the entire income statement which we can collapse into this one equity so this number from here on down we can collapse into one number which will typically be a credit because it's going to be the credits are beating the debits because it's a credit balance account income good expenses bad when we net them together we get a net good credit in this case let's check that out by just moving it up to 2025 to see how we're 010125 to 010125 run it and the whole thing squishes together into one owner's equity account letting us see clearly that the income statement is part of equity and just a story it's telling us a story because this is just telling us where we stand and that's boring I want to know like action things that happened and that's when we so we break it out into a story but not too long of a story we don't want to know the whole life of the company we just want to know the last year of stuff because that's when the exciting stuff happened it's close to current time where I'm at and that's the important part of time