 QuickBooks Online, 2024, bill form, get ready because we're moving on up with QuickBooks Online. 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 that's okay, whatever, because our merchandise is better than their stupid stuff anyways. Like our, trust me, I'm an accountant product line. Yeah, it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep, complex and nuanced questions. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our browser searching for QuickBooks Online Test Drive. The primary tool we'll use for the first part of the course looking for the result that has Intuit.com and the URL Intuit being the owner of QuickBooks. We're selecting the United States version of the test drive software and verifying that we're not a robot. Duplicating some tabs so we can put reports in them, right-clicking on the tabs up top and duplicate. Right-click on the tab that is thinking and we'll duplicate it again. Back to the tab to the middle as we do every time going to the reports on the left-hand side looking at one of the favorites that being the balance sheet. Then we're going to tab to the right, go to the reports on the left-hand side and open up the other favorite report, the income statement. They must be your favorites. They have to be. You don't have a choice. These are the financial statements. These are your favorite reports. You can have other favorites too, but these have to be included. In any case, let's go to that first tab now. This is what we do every time. This is my data input tab. These two tabs are representing my financial statements, which may change as we do data input. Then we're going to select the drop-down up top. We're focusing in on the vendor cycle. We discussed last time that your vendor cycle flow may differ depending on the type of industry you're in, how large your company is. The easiest process of the vendor cycle being you just pay the expenses as they become due, possibly with bank feeds using, in essence, an expense form or a credit card type payment form. The next easiest way is you enter a check. In that case, you want to do that first because you want to make sure that you're tracking those outstanding items that have not yet cleared the bank. We're going to start off here with the full service accounting system, that being where we're going to enter a bill. So quick recap on the terminology because we want to make sure that we get the terminology straight so we can use it in normal parlance, normal language with people, as well as accounting terms. So the vendor means that we're paying somebody else. We are a vendor in normal accounting or normal just talking terms because we sell stuff. But for accounting, the vendors are the people that we are purchasing stuff from. Money is eventually going to be going out of our business for the things that we are purchasing. And a bill form in normal language could be anything that someone issues us for something that we purchased, meaning if we got a utility bill, we'll call that a bill. Notice that the bill that we get might actually be called an invoice because you can use those two terms kind of interchangeably. And it might actually say invoice on it because the accounting software that they used, if they used QuickBooks would say that they're entering an invoice and issuing it to the customer. But on our side of the table, we're viewing it as a bill that came from that we're going to have to pay to our vendor. Now, even more specifically than that, the bill, if we paid that utility bill with a check or an expense form, then although we might call it a bill that we got from the utility company, we're not actually entering it as a bill form in the QuickBooks software because we paid it off with an expense or check form. The bill form in QuickBooks means specifically that we're increasing the accounts payable and we plan to be paying it off at some future point. Let's first take a look at the cycle of the bill form. And we deconstruct from the financial statements. If I look at the balance sheet, I'm going to scroll in a little bit. The bill increases accounts payable. Whereas accounts payable, it's a liability. So I'm going to go down here to the Liabilities section and we're looking at the accounts payable. If I go into the accounts payable, we can see that we should have very limited number of transactions in here. And those transactions are going to be that it's going to be going up and then it's going to be going down. And it's going up when we have a bill form and it's going down when we have the payment form, which is going to be a check payment form. Notice that in every other account other than cash, the number of transactions and the transaction types of forms will be much more limited than in cash because cash is the lifeblood of the company. Every cycle at some point flows through cash, whereas every other account is not that way. So this account is only going to have certain activity. Bills are going to increase it. The bill form is going to, the bill payment, which is basically a check, is going to be decreasing it. And then when we pay the bill payment, the other side of that will be recorded to cash after we pay it at this point in time. Also note that whenever we deal with a bill, whenever we're going to be entering or dealing with accounts payable, which has a subsidiary ledger, because it's not just, I can't just know how much money I owe. I also need to know who I owe it to. So I need to track this not just by date of when the transaction happened, but also who we owe the money to, in other words, by vendor. So I'm going to go to the tab to the right. I'm going to make another tab and open up another report, right-clicking on this tab, duplicating it. And then we'll open another report, which is going to be like all reports, in essence, or most reports, reports on the left. It will be, you know, more information, more detail about one or multiple line items, in this case, one line item on the balance sheet or profit and loss. In this case, the balance sheet. I'm looking for, I'm going to scroll down here. Who owes you? No, we want to know what you owe. In the what you owe area, we've got the accounts payable aging detail and accounts payable aging summary. Let's take a look at, and then over here, let's actually go over here to the vendor balance detail and you've got the vendor balance summary. Let's go to the vendor balance detail report. And so now you could see, I'm going to scroll in a bit here. You could see that this is a report of the outstanding bills that have not yet been paid, sorted by the vendors. And if we add them all up, they add up to that 16607, which ties out to what's on the balance sheet. So that's going to be really important. Now in practice, we probably might not be using this report as much, but rather tracking these items that are outstanding internally by going to the, I'm going to go to the first tab, going into the expenses on the left hand side. And then we can track it by the bills here that we saw. There's multiple ways that we can look at it. I'll close up the hamburger. We can go into the unpaid bills so we can see the unpaid bills here. We can also see that that ties out. You can see that that still ties out to what was on the balance sheet in accounts payable, which is nice. You could go to the expenses form and we can sort this information by the bills. So we can go into here and say we're going to sort it by the bills and see the outstanding bills here. And then we can also go to the actual vendors and look at our information on a vendor by vendor basis. And within here we can look at the open bills and we can sort the open bills here and see those items for the open bills on down below. Let's just enter one so we can kind of track and see what the bill is going to actually do. So if I hit the drop down and we go down to a bill and we'll just make up a new vendor as we do the data input so we can kind of see it as we go. So I'm just going to make up a name vendor vendor number one. That's going to be the name of the vendor. Remember that we when we looked at the vendor center we talked about how you can add a vendor. This is probably what you're more likely going to do most often add the vendors as you go. If it was a repeat vendor I would have it in the drop down. So I don't want to make sure I want to make sure that if I have a vendor already I choose the proper vendor. I want to have two Bob's burger joints in here that are spelled slightly differently or something like that. So but if it's not in a vendor then we can add a vendor with the plus button here or I like to just type in the vendor because then it'll start to populate down here. If it's a current one or if it's not I could just add the new vendor and then we can populate all this information. But oftentimes you might only need basically the name that you're going to be tracking by for many vendors like the telephone company or something like that. We've got the mailing address. Now this may or may not be necessary because like I say if you're paying off the telephone bill you might not need their mailing address or anything like that. It would only be necessary if you're doing something with some kind of shipping involved. The terms mean when is this thing going to be due. Now the terms when you enter an invoice for our customer become really important and you can standardize them. It's much more difficult to standardize the terms as you enter bills because it's going to be dependent upon when you entered the bill. So it's more likely with the terms here that you can't just say it's going to be due in 10 days or so. You're going to have to see what the bill date is and then what the due date is. So you're going to have to actually go in here and say OK well the due date is whatever 12 27 23. That's important if you're going to be sorting by when the thing is due because of course when you're tracking the outstanding bills I want to know when the thing is going to be due. And so then we've got the tags. We have a whole we might have another section on tags if you want to get into that but that's a whole nother kind of issue and in and of itself. Let's make a generic account. So if I can choose the account like telephone or something like that there's our account that it could go into down here. I'm going to make a new account. So I'm just going to call it vendor vendor one expense. Now you don't typically want to make up a new expense account because usually there will already be an expense account. But I think this will be the easiest way for us to see the transaction in our financial statements and show us how to enter a new expense account as we go. So I can go tab. It's going to be an expense type of account. So we're going to say this is going to be an expense type of account and we're going to say advertising the sub account. I'm not normally as concerned with for the sub account. So I might just call it other business expense vendor one expense. That's the name that we want. It's not going to be a sub account. Sub accounts mean that it would be under another account. We'll talk more about them later. Save it and close it. And let's just say it was for you know $510 when it says it's billable here. What does that mean? That's a setting that you would turn on which we might talk about later. We will talk about it later in that if you wanted to make an invoice from this item, meaning you have a job cost system. For example, and you're purchasing this particular item from this particular vendor so that you can then create whatever you're creating and basically sell it to somebody. The way to create the invoice, you might want to try to pull this into the invoice and then charge your customer for it. So this will link to the invoice. And then we have tax if there's going to be a tax involved with it that would be linked to the billable item because we're typically talking about sales tax here as it pulls into the invoice. And then the customer would only be necessary if it was a billable item. So all of these three tabs would only be necessary if it's a billable item. Now we could have multiple other expense accounts like like which isn't often the case, but sometimes you might have that right. You might be saying, for example, I might have the telephone bill that I want to break out into two expense accounts because I have two segments or two departments that I need to break it out to possibly if I was using class tracking or something. So you might end up breaking it out. You know, for that reason you might have multiple expense accounts and you can add more lines down here if you needed more lines to be adding. Also note that we're usually going to be using when I enter a bill or oftentimes when I enter a bill, we might be using the category detail, which means I'm going to assign it to a particular account. Usually an expense account, but possibly not always because we might be purchasing like an asset like property, plants and equipment. But usually I'm an expense account. If I'm buying inventory and I'm tracking it internally using a perpetual inventory system, then I would have to use items. So items are going to be going to be tracked on the inventory side of things. So we're going to first, the default is going to be into the categories where we just assign an account. And then you could put a memo down here if you needed to. You could put attachments if you had like a receipt or something that you needed to put down here. You can include it here. We have the clear option down or cancel clear. You can make it reoccurring. So if this is something that's going to happen periodically and you want to make your data input faster, you can go to the reoccurring information. Save. We have the save and schedule payment versus the save and new and the save and close. Let's actually make the date in 2024 because that'll make it even easier to see. Let's go from 010524 and then make it do 0124, let's say. So there won't be much in that area. So let's go ahead and save it. And I'm going to say save and close and we'll check it out. So just note, if you look at like just a journal entry standpoint, what this would do if I was just to say, what's going to happen from a journal entry? Well, it was a bill. It's a bill form. What happens? This is just a quick little worksheet so you can see a journal entry. Well, the journal entry increases accounts payable. I'm sorry, it should be a credit to accounts payable. It goes up with a credit and the other side is going to go to the expense form, an expense account. And it was for 510 and I'm going to make my credits negative. So what does that do? If you just look at it from a journal entry standpoint, we're going to say, all right, accounts payable is going to go up in the credit direction. That's why I have it negative. It's increased in the credit direction. And then if it was paid for an expense, we're going to see that the expense is going to go up and it's going to have. A negative decrease the net income. So net income is actually negative by 510 at this point in time, which is why it's red. That would be just the normal journal entry. Now, the journal entry doesn't. That's not all we need to do because you also in actual accounting software are going to need to deal with the sub ledger, which becomes important tracking this, not just by the accounts payable, but also by who we owe the money to. So let's see it over here. If I was to say, let's change our dates from 010124 to 123124. And then I'm going to, I'm going to zoom in a bit. So then I'm going to go down to the accounts payable. Here's our accounts payable. Go into that one. And scroll down a bit. And then there's our bill. So the bill increased the accounts payable. If I go into it, we can actually drill back down to the source document. That's really nice. So we can see the source document here. There it is. Let's close it back out. And then I'm going to go back up here. Notice I'm not using this back button. I'm using this one right here. So most of QuickBooks has it all internal internal there. Now the other side, there's always two accounts that are affected for every transaction. So the other side is going to the income statement. And I'll make sure it's refreshed. So we get the current information. And we're going to go down. I made a new expense form, which I just called like expense. What did I, what did I put it? Oh, I have to change the date. That's why I changed the date. Oh, one, oh, one, two, four to 12, 31, two, four. Run it. And so now you have the expense form. So the 510. So two accounts are affected. If you put those together in a trial balance, these are the two accounts that are affected. And you can see it kind of more simply right there. If I go back on over to the first tab, we can also see that because accounts payable was impacted. Where did the accounts payable go? There it is. Now the accounts payable is at 211267. If I go to my sub ledger and I say run this again, then we should have our vendor here. The total is at 211267. And then if I, if I want to track this, I can go back to my first tab and internally I can go to my expenses. And then we can track it on the expense tab sorting it by the bills. Right. We could sort by the bills. Here's that bill. We could sort by the due date of the bill to see when it's going to be due. If I go into the bills tab, that's probably more likely where we would go to sort this out into the unpaid area. Then we can sort this by the unpaid. This one, it's sorted or sorted by date down here. So this was going to be due later. They're not overdue or anything. And then if I go to the vendors, I have my new vendor that's going to be set up here. There is the vendor that has been included. Now the next step of this would of course be that we pay the bill so we can schedule a payment here or make a payment. And when the payment happens, that means from a journal entry standpoint, what's going to happen? The accounts payable is going to go down and then we're basically going to be paying it with cash. We'll talk about the pay bill form. That'll be another form in a future presentation. Notice the journal entries are too simplified because there's also a sub ledger that we need to track, which is the vendor sub ledger over here. Now if I entered another bill, let's just enter another one and we say a bill. If we were purchasing inventory, let's call this vendor number two. And remember that all of this stuff that we're entering will be deleted once you log out and go back into the system, which I do every time. So every time I start a new presentation, it's not going to have the stuff that I entered last time in it because I'm going to log out and log back in to it. So no terms. We'll say this is going to happen on, let's go up to the six and nine. And this time, instead of a category, I'm going to use an item. So now I'm going to use an item. I'm going to make up an inventory item just as we go. We'll talk about items more later, but just to show you here in a bill form, I'm just going to call it item number one, item number one. We're going to add and it's going to be what we'll call it an inventory item just to make it more complicated. And we're going to say it's going to go into the inventory asset account. We're going to track it perpetually. Item is inventory. The sales price, let's say, is $700. And it's going to go into the income account when we sell it. Okay. And then standard sales tax. We'll keep the sales tax on it. And then the purchase side, which is what we're doing here because we're purchasing it with a bill, let's say is $600. So we buy it for $600. We sell it for $700. And we buy low, sell high. And then the expense account will be cost of goods sold when we sell it. And the vendor, I don't need a referral, just keep it as where it is now. So I'm going to say save it. And I need the quantity on hand is currently, well, I would have to, let's say it's zero on hand here. And as of date, I'm going to just say the beginning of reorder point. I'm not going to put a reorder point at this time. And so we'll just let it roll down to zero. So there we have it. So now I'm going to be purchasing, let's say we purchased two of these for $600. That comes out to $1,200. So I'm going to say, okay. So what's this going to do? It's still a bill. It's going to enter the accounts payable. But now we have an item in it, which means it's going to be going to inventory from a journal entry standpoint. So if I was to show that over here, instead of going to an expense form, it's going to go to inventory. So instead of going here, it's going to go up here. No impact on net income on the income statement because it's going to go into inventory. But if we're tracking it in QuickBooks, there's also the added sub ledger now that we have to deal with within QuickBooks that we'll see here too. So that's the added difficulty if you're doing a perpetual inventory system. So we're going to say, okay, let's say the dollar amount was different, but that's anyways, save it. And let's check that out. So if I go to the balance sheet and I'm going to run it to refresh it. And then I'm going to say, all right, then, then I know that accounts payable was impacted. If I go into the AP accounts payable, scrolling down, there it is here. I'm going to go back the other side. This time doesn't hit the income statement, but it's on the balance sheet going into inventory. So that's going here. So there we have it in inventory. There's the bill there. And now we have this added issue of tracking the inventory, which has another sub ledger. So if I go to this first sub ledger, this is tracking the bill in here. Let's run this one. And this should now add this. This should now tie into the accounts payable on the balance sheet. I'm going to right click on this tab and duplicate it. And then we're going to add another report. And let's just type in inventory inventory valuation summary. Let's just take a look at that one as of 1231 to four because we're working in the future. And so now we have this item also showing here. So this is tracking the inventory items by unit similar to how we have to track the accounts payable by vendor. So this 1,796 hopefully ties out to the 1,796 over here on the balance sheet. Now just one more that I want to run here just to just to show one other kind of issue if I enter a bill over here. And let's say this is going to be for vendor three. I'm just going to add vendors as we go. And we'll just say this happens on like the 10th. And then it's do we'll just keep it there. And so this time I'm not going to enter an inventory item back to the category detail. But I might be purchasing property planting equipment like fixed asset. So let's just type in fixed asset, which might be equipment or something. I'm just going to add it this way so you can see the process of adding it this time. It's not going to be an expense. And again, you wouldn't be adding them every time. I'm just adding new ones so you can see the difference in the account types. It's not an expense. It would be an affixed asset because we're buying equipment or something like that. And then it's going to be fixed asset down here. I'm just going to call it computer old fixed asset is just a generic. I'm not going to make it a sub ledger. I'm going to save it and we're going to say the amount here. Let's say was usually the larger amount. It would be for a larger amount here. Let's say it was for 2500. So now this is going to do the same thing we did before. It's still hitting accounts payable because that's what the bill form does. But this time I'm going to add an account insert. It's going to go into shift sales down. I'm going to call it fixed assets like equipment. And so now instead of going and I changed it, let's just put the proper dollar amount 2500 to five. And so now it's going to go not here, but here. And this is going to be fixed asset, which is not spelled right. And so now you can see once again, it doesn't impact the income statement. Nothing's happening on the income statement. It's just this is going up the fixed assets going up. It'll impact the income statement when we do depreciation. So that's another thing we might purchase on a bill. It might not always be at the expense. So if I enter that, save it and close it and check it out. We can say balance sheet, K-PASO, what happened? We're going to go the accounts payable, the aid to the impacted once again, as would be expected. Boom. And then back. And then we're going to say the other side this time is not going to the income statement or inventory, but rather another account, which we just called fixed asset. So now it's up here and fixed asset, which would then need to be depreciated. So boom, there it is. So when we purchase things, whether it be with a bill form or expense form, we might be purchasing like just expenses, things that we're going to expense to the income statement. That's the most common thing. Or we might be purchasing inventory, which we need to decide how we're going to deal with. Are we going to be tracking it on a perpetual inventory system within QuickBooks, in which case we have to turn on the items properly and track them in that format. Or we might be purchasing a fixed asset, which is less common because we don't purchase large items as often, but you want to make sure that you're able to differentiate when you're purchasing an expenseable item versus a large item that you might have to put on the balance sheet and depreciate it. No matter which method we use, if we entered a bill form, we can track the bill form over here using usually internally on the expense aside, the expense tab, the bills or the vendors. Oftentimes, if we're trying to pay the bills, we'll be using those bill form sorting the bills that are due so that we can then schedule payments or make payments as the case may need be, which we'll talk about that form in future presentations.