 0. Accounting Software 2023. Income from Bank Feeds and Income Categories. Get ready to become an Accountant Hero with 0. 2023. Here we are in 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 we're 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. Bayer Dynamic? Not sure if I said that right, but this is the DT770 Pro 250 OHM Studio Reference Closed Back Headphones. I wear headphones basically every day for a large part of the day. They are important to me. Therefore, I've gone through many different kinds of headphones. I've had these for some time and they've worked quite well. They fit over my ears, but I'm still able to put my glasses on under the headphones. 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Courses which are well organized have other resources like Excel files and PDF files to download and no commercials. Our custom zero homepage going into the company file we set up in a prior presentation, the bank feed file. Duplicating some tabs to put the reports in like we do every time. Right clicking the tab up top so we can duplicate it and then we're going to right click the tab up top again and duplicate it again. Let's go back to the middle tab. Accounting drop down open up the balance sheet report tabbing to the right accounting drop down and this time the income statement report. Changing the date range on the income statement to 2022 because that's when we entered our bank feed data. So January of 2022 to 2022 of December and update it. So there we have that tabbing to the middle. We look good on the dates here. Let's tab to the left open up our bank feeds accounting drop down bank feed. We set up our bank feeds in a prior presentation. This is what we currently have our checking account hitting the drop down in the manage account and the account transactions to get the information that's currently in the bank feed limbo as I call it over here on the reconciliation side. We've been doing our best to construct our financial statements directly from the information from the bank creating our transactions as we go. We've been focusing in on the decreases to the checking account recording mainly expenses from them is the primary transaction. Now we want to think about the increases. So an increase to the checking account for most of the time most of the increases hopefully are coming from the business and from therefore from customers. However we might have some different arrangements on the income side and try to think about how the bank feeds will fit into whatever accounting system we will be using. So what we're going to try to do is let's look at our let's look at our flu chart over here. This is from the QuickBooks desktop but we're just looking at it to consider the flow of the forms involved which is basically the same for any accounting system. And let's think about how the bank feeds would fit in primarily to our customer or revenue or sales side of things. Now the easiest kind of system what would be the easiest thing to do for the bank feeds. If we could have a system where we could just wait till something clears the bank and then simply record it revenue when it clears the bank that would be great. So we're just going to say hey I'm just going to wait till everything clears the bank anything that's an increase to the checking account. I'm just going to record as revenue. Now we can only do that for certain types of industries. So if you're if for example you're in gig work or something like that then you could probably use this system if you're getting paid by YouTube or some other platform and you just wait till they pay you and you receive the money. And you could just record it as income when you receive it. It was an electronic transfer so you can even determine oftentimes who paid you through the through the information on the transfer. Now even with other kind of systems you might be able to say well if I have a shop and I'm just selling stuff even if I was selling cash kind of things. I might be able to just wait till I sell everything deposit the money in the bank and then wait till it clears the bank and record it as revenue. At the point in time it clears the bank. I won't have a lot of detail in terms of who paid me who the customer was but that could be an easy thing to do. But oftentimes if you're at a register or something like that you're going to have to add more complexity because if you're at a register you usually want to have internal controls. Meaning you want to record the sales at the point in time that you make the sales in like a food truck thing or store or something like that. And then you would like to be able to tie out your money in the register or the receipts you have from other forms of payments debit cards and whatnot with the sales receipts. And then you're going to have this issue of tying out what you put into the accounting system in zero with what gets deposited in the bank. Either from you as you physically deposit all the cash you have received at the end of the day or from the transfer items the third party platforms like a credit card or other kind of payment portal platforms. So that'll be an added level of complexity. And then if you're in a system where you have to invoice people then you can't just wait till something clears the bank to record the revenue because you had to do the work first. The industry drove you or told you you had to do that because you want to compete and that's just the way it is. So if you're accountant, if you're a lawyer, if you're doing landscaping oftentimes you do the work first, invoice the client. Revenue being recorded when you invoice the client then you need to track that accounts receivable and receive the payment on it. So we'll start off with the easiest method here. Imagine we're in like gig work and we could just rely on the bank feeds and just record revenue when we have the bank feeds. So if I go back on over, notice that if I go to my income statement, normally I have, if I look at the accounts in the income statement, I have income and then expenses. Normally the income side of things has very few accounts. We only have a few things that we do to generate income and we have a lot of expense accounts because everything that we're paying for has different categories of expenses. So usually we don't have that many income accounts. Now the errors that people often make on their income accounts is they want to make an income account for each customer, for example. Normally you don't want to do that although we're going to make an exception here. Normally you don't want to do that because you'll end up with a very long income statement. You don't want a separate income account on your income statement for every customer because you'll end up with a long income statement and hopefully you can get that information by generating other subsidiary reports which will give you that added detail. So we'll summarize it on the income statement. You can run other reports to break out your income by customer or people want to break out their income by item that they're selling. So every different item if they sell inventory item which again will result in too many categories on the income statement making your income statement over-wielding, overwhelming and usually you can get that other information on subsidiary reports again. Now there's kind of an exception if we're actually building our income statement from the bank feeds using deposit forms we may not have as much other information to track by like the customers for example. So in that case if you're dealing with like gig work and you're getting paid by YouTube you could call it a generic revenue account and you could say well it's for my video editing revenue but it's probably safe to say yeah the customer YouTube I'm just going to record it as YouTube revenue right? Or if you're getting paid by these other platforms it's probably natural for you to think well I'm just going to record it as the platform I'm getting paid by Amazon or I'm getting paid instead of breaking it out. So this is kind of like an exception to the rule sometimes that you might have with this kind of system of gig work. Alright that said let's find some revenue accounts here. Note I'll try to look at it on the coding side here just so we can kind of look at some different revenue accounts and if I sort this by payee for example here like we might have like different like Amazon if we get paid by Amazon that might be something that's like gig work. Now with Amazon you might have different things that you do for Amazon. They might pay you for affiliate marketing versus getting paid for selling things on the Amazon and whatnot. So Amazon might have different indications within their account title. This one says Amazon.com this one is Amazon.com. CA those different kind of variations can oftentimes help you create more detailed bank rules to try to break out exactly what the purchase was for. So Audible another account so again this is a situation if you have Audible like you made a book and you're getting paid on the books then you might be able to record just an Audible book account if you have multiple people paying you for the book revenues but oftentimes if you only use an Audible you might just call it Audible revenue right. And then Google so Google might pay you in different ways as well for and again so you might just call it Google revenue or you might call it ad revenue and then break it out in that way interest payments are usually fairly straightforward. Now we have this issue with transfers with intermediary platforms. So if you use something that's an intermediary platform and you're doing like gig work or you're doing online transactions and whatnot and oftentimes some platforms will want to pay you through another intermediary platform like a stripe or like a PayPal. Now that means you're going to have some options with those kind of kind of systems because now you have to think I can do more complex systems or less complex systems with this intermediate platforms. The easiest thing to do like if I'm using PayPal or Stripe let's say just for like one type of thing that I'm receiving money from and I'm just using it as an intermediary tool to help me then transfer that money from PayPal or Stripe or whatever to my checking account then I might say hey look I'm just going to wait till it hits my checking account and just record it as revenue. So like if all this money came from my website sales on my website then I can say OK I want you to record it. I'll just wait till it hits my bank account and I'll record it as website sale revenue or something like that and I'll have all the detail of what was sold you know on the website. I'm not going to have all my customer information in zero that way and maybe I don't need it because I have it on the other website and it would only slow down zero if I overwhelm it with too many sales. If you have a Shopify store or something like that which is a common example then you might be trying to sell quantity a lot of stuff on Shopify and the question is do you really want to pull in all of that information the sales transactions individually into zero. The common argument is no oftentimes because you just really want to pull the net information into zero because you already have the detail in the other in the other accounts and if you add all the customers it's going to be overwhelming. Also note that there's some businesses where you want to be able to track all of your customers in detail because you might like in a construction business you might do multiple jobs for the same client and you want to build a good relationship a trust built based relationship with that client. So you want all the information related to them but other businesses like a Shopify store you're probably doing just a one off sale if you sell a widget and that's all you sell is this widget. Once they buy the widget you know you probably other than having them on your newsletter you probably you probably don't need as much repeat information from them so it might not be as valuable to be tracking the detail of the customers in as much detail. So we'll actually tie the other thing you can do with these PayPal account is because PayPal is becoming more of a like a checking account that muddies up the situation so if you are using PayPal as a checking account not just an intermediary account where you're collecting money and then just transferring it to your checking account well then you might try to connect PayPal as with the bank feeds if you can is another method or try to try to you might be able to download the PayPal information and upload it and that'll give you more detail with the PayPal which we might test out in future presentations as well. Now also note that if you have multiple things that are coming through these intermediary platforms like you have a website and then you have multiple different other platforms that are paying you through PayPal then again you could just wait till it hits your bank account but then you just kind of group it as one lump sum if you want to break out the detail between those different areas you're going to have to get the more detailed information from the intermediary platforms and there's various tools you can do for that for PayPal you can actually go into PayPal you might be able to set it up as a bank feed or go to PayPal and upload it as bank feed stuff but we'll talk more about that later. Alright and then we've got Skillshare like another kind of platform kind of thing if they just pay you by platform Stripe is the other big is the other big one that is often a intermediary platform so you're getting paid from some other platform and then it comes through the Stripe. So those are just some examples let's add like a Stripe one. So let's say this is a Stripe transaction now I can't really see because Stripe is an intermediary platform I can't see who actually paid me I can only really see that I'm getting paid from the intermediary collection of Stripe so if I want more detail I'm going to have to pull the information in from Stripe right or from the platform that was paid but that might be too tedious to do if I'm going to say all this Stripe income is coming from one source like my website then I might just want to summarize that data when it hits the bank account that's the easiest thing to do so let's do let's try that now I'm going to say alright let's just summarize this and say it's coming in from Stripe I'll just I don't need all this other stuff I'll just call it a Stripe vendor now notice a Stripe isn't really the vendor Stripe is the intermediary platform but I'm just going to call it all Stripe vendor or customer I mean in this case because we're receiving money because because I don't that's it's a generic customer name and then I'm not going to have any item because I'm not tracking even if I'm selling unit items on Shopify or something like that I'm not tracking it on a perpetual system if using this method here so I'm not going to add any inventory items I'm just going to put the lump sum into an account now I'm going to imagine this comes from like a website right so instead of just dumping it into my sales account I'm going to create another account and call it what was my sales account let me get the number right let's say four three one zero let's say let's say four three five zero let's say and this is going to be a revenue type of account so let's say revenue or sales let's call it let's say revenue and then this is going to say website sales and I'm just a generic website sales I'm going to say okay now I could make a rule for this so we'll create a rule here I'm just going to say let's make a rule for it I'm going to go up and say options and let's make a rule the bank rule bank the bank is ruling things again so any condition matches I'm going to say it's not the payee field but rather I'm going to say any text field if any text field contains then strike I don't need all this detail I'm just going to say if it contains stripe similar kind of process with the money out stuff I'm going to delete the second condition I don't need any other condition and say set the contact the contact is going to be the stripe let's say that's not that's not what I wanted it's going to be where's where can I copy the stripe transaction boom I'll just say it's stripe okay and then we're going to say description it's going to go into the account website sales hundred percent and I'll move this to from the reference and then check in account and then I'm just going to call it stripe I don't need this other stuff I'll just say stripe transfer that's good that's what the rule name will be so I can say alright let's save that and the rule should be applied and so now I can see it here and I can add it so let's add it and then I can see the rule being applied to these other stripe transactions if I go into the cash coding I can see I can see them here as well so I can see these website sales transactions being added if I sorted this by the payee for example then I can see all of these transactions alright I'm going to go back to the first tab and let's let's go to my balance sheet and update it so now we've got some money going into the checking account which is good even though it's still overdrawn so it's a liability I'm going to go into the checking account and we'll say we had then money in for the debit sign I don't see it here let's go back let's just make sure I added some of these if I scroll through here let's just add a few of these I'm going to add a couple back to the balance sheet update it into the checking account going into the checking so here we go so here's a couple stripe transactions now if I go in there it's a receive money form so if I go into it similar to what we did with the expense forms I'm not going to go back to the bank feed but rather to receive money form right so I'm going to go back and then back and then the other side is going to the income statement if I go to the income statement and update it so now we've got this website sales website sales I put into that kind of generic account and we've got a rule so everything coming through should be applied let's apply some more of those rules out I'm just going to say add some more of these stripe stripe stripe stripe and I can just easily just check them off here and check them off check it out and check it off so here's a stripe one stripe stripe Verizon stripe and stripe I should probably add the Verizon to one I don't know why I wouldn't but we'll just add these for now we'll clean this up a bit stripe stripe stripe and and stripe stripe stripe stripe as a lot of these all right and then so Cal stripe stripe and stripe and so that's it so if I go back to the balance sheet is that enough to make our checking account positive no we're still we're still negative on the checking account okay whatever let's go back to the income statement and those have now been added here so we're good there if I go to the first tab we can also see that we've been creating these transactions on the account on the account side of things so now we've been creating these transactions as we go all right and we've been reconciling them and I in our contact area all contacts we can see this information broken out by contact so I can go down here and say that we now have stripe as a as a contact all right okay so also know if I go to this tab to the right well I just want to show you the subsidiary reports that you can kind of track which is why you may not need you know all this information broken out by contact even though it kind of makes sense sometimes to break it out by contact if you're getting paid by like YouTube or something so if I right click on the tab up top and duplicate it let's go into our reports again and we're going to go into the accounting drop down reports and then if we go to the financial reports you have then where did it go no it's not under the financial report it's under it's under the payables and receivables where you have income expense by contact that's what I want income and expense by contact so let's check that one out so if I open that up and we change the range up top let's change the range so we're going to go I'm just going to go for the year of 2022 January 2022 to December of 2022 boom okay so then you could see it's kind of breaking out our income and expenses now if I just want to look at my income then I can go up top and filter this and say by type I want income and apply that so now I now I've only got the two income accounts broken out by customer but this total should for the most part generally tie in 315044 to the income statement 315044 so that's why you don't want you don't really need a whole lot of detail or one reason you don't want a whole lot of detail of different income accounts if you had like a hundred customers and you put a hundred income statement accounts here that wouldn't be generally good idea in part because you could still get that detail by breaking a report like this out and then you can export this to excel and you can make pie charts out of it and stuff like that if you if you so choose alright let's just open a trial balance and we'll see where we could just see how that's being constructed as we go so back to the reports we'll go into the trustee trial balance type in in trial balance the balances are on trial again I hope they're good hope they're innocent alright so then we can see the balance sheet on top of the income statement so here's our balance sheet accounts the income statement accounts starting after retained earnings there's our income statement sales new account the website sales and so on debits and credits being in balance which is a double entry accounting system being shown and that's equal the same kind of idea concept as assets equal liabilities plus equity on the balance sheet the income statement plays a part it's not on the balance sheet the income statement is broken out but is summarized on the balance sheet for the current year earnings which is included in in the equity section 3443 19 which is the bottom line of the income statement the income statements showing the performance over the time period