 zero accounting software receive money deposit form get ready to become an office hero with zero here we are in our custom zero homepage scrolling in a bit holding control scrolling up currently at 175% on the zoom and we're gonna be opening up the demo company file but doing 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 than 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 win applicable so once again click the link below for a free month membership to our website and all the content on it and so by selecting the reset which will reset the data and open up the demo company file once open will open up two more tabs to put the reports in I'm gonna hide this item over here right-clicking on the tab up top we do this every time right clicking on the duplicated tab to open up another duplicated tab and in the middle tab we're gonna go to the accounting drop-down open up the balance sheet tab to the right and then in the accounting drop-down we also want the income statement tab to the left we're gonna set the date in our case to 2022 and that's the setup process we do every time updating it back to the first tab now we've been looking at the revenue cycle the accounts receivable cycle the customer cycle which at the end of the day should generally result in cash going up in our checking account for goods and services provided to customers quick recap in the flowchart over here the process of us receiving that cash will be different depending on the industry if we're just getting paid from gig work like YouTube or something paying us we might be able to let it clear the bank deposit it possibly with the use of the bank feeds if we have a cash register situation then we're gonna receive the cash at the same point in time we do the work that'll still be a cash based system but a little bit more complex than being able to just wait till something clears the bank we are currently looking at and have been looking at the full accrual system where we enter the invoice increase in the accounts receivable then we receive the payment and then we're gonna make the deposit now note that this is going to be the critical component the point from here to the deposit is going to be a critical component because if we're getting paid in an electronic transfer or something like that then we can probably deposit it at this time when we get the payment directly into the checking account and we'll be able to reconcile with the bank because it'll show up on the bank side in the same way however if we're getting paid cash either through a receipt from an invoice or from the sales receipt of some a sale that was made at a cash register that we're then going to deposit in a group some then we have an issue because we always want to be thinking about on the deposit side particularly what is this going to look like when it goes through the bank side of things because I want to be able to reconcile our books to the banks as easily as possible if it's going to go into the bank as one lump sum we don't want to record it on our side as multiple separate deposits going into our bank account on our side because we won't be able to reconcile either with the use of the bank feeds or with the use of the normal reconciliation bank reconciliation process so that's when we might have to add a little bit more complexity so let's go through that process again just to show it I'm gonna I'm gonna do the full thing I'm gonna do the invoice and then we'll receive the payment I'm gonna put it into an undeposited fund and then we'll make the deposit and we'll talk more about that grouping process and why you might want to use kind of a clearing account in some cases so I'm gonna create an invoice let's create a couple invoices here and I'm just gonna say it's gonna be a a a a a a and then tab and then this is gonna be the item let's just make a new item up top new item and I'm just gonna say this is gonna be item service item one let's say and I'll copy that to the item name as well I'm not gonna make it an inventory item I'm just gonna keep it with that thousand dollars here and then the sales accounts just gonna be sales we're not gonna deal with any sales tax I'm gonna say no sales tax on this item and there it is and so no inventory tracking let's save it there it is what's this gonna do it's gonna increase because it's an invoice accounts receivable the other side increasing the sales account driven by the item we're not gonna be dealing with any tax involved in it and we're not dealing with any inventory which is nice then I'm gonna say save and new this time so I'm hitting the drop-down save and add another thank you sir may I have another and so then we'll do it again this one let's say it's BBB and then we're gonna say this is on December 16th okay whatever and then I'm gonna go down here and say this is let's go with the same item what did I call it item service item one let's say we have two of them here and so there's two thousand and so there it is so let's go ahead and approve that and then I can see what happens with those by going to the account let's go to the business drop down first and go into the invoices and those have now been appeared in the awaiting payments on the invoices so we see those two here we also see them in the contacts drop down customers we can see them here in the AAA hold on a second where's the customers there we go and then the BBB is down here if I go into one of those we can see the activity so when we get the payment we can go into here to find the the customer that's paying us or we can go into that to the total invoices that we saw in the business drop-down and the invoices for all of the open invoices when we receive the payment on the balance sheet we know that the accounts receivable is going to go up so it went up with those invoices I won't drill down on it this time because we saw it last time and on the income statement we know that the sales went up and then we also have the subsidiary account for the receivable let's open another tab by right-clicking duplicating the tab so that we can pull up that other subsidiary report accounting drop-down let's go to reports and let's go to then the aged receivable summary let's just go to that one and so now in this report we can see the detail of who owes the money let's pull this up to the 31st and update and so there we have it so there's a AA there's BBB and the point is that the total by customer should tie out in this kind of sub ledger report 12,000 172 63 to what's on the balance sheet of hold on let's update this update 12,000 172 63 if something's not refreshed properly then obviously you probably need to update the report okay first tab now let's say we're gonna receive the payment on it so I'm gonna do it I'm gonna do it one at a time now we could select a hold on a second I'm gonna go back I wasn't in the right area we could go to awaiting payments and then if we got paid both at one time we could select like both of them and possibly have a deposit but more likely we're gonna receive payments individually from them so let's go into say the BBB for example and let's say we got a payment I can go down here and say we've got a payment I can put the date of the payment let's say the 17th and that was paid to usually the checking account right that's where it's gonna go when we get the payment now this is where we have to be careful because if it was like a transfer then it would go directly into the checking account and there wouldn't be really a problem we can match it to the bank feeds or possibly even use the bank feeds to match to the invoice and that would be that would be great that's one system that we can have but if we if this was getting cash for example or possibly if there's a credit card transaction that we have the intermediary of the credit card company then we might be combining this payment with other cash payments to make a deposit or combining this credit card payment with other credit card payments before the credit card company deposits it into our bank account in which case I don't want to take this directly to the bank account because I won't be able to match it up to the to the bank side of things using the bank feeds or the reconciliation so again if it's if you if you're depositing each payment you get individually into the bank either a check a transfer or or or something like that or even cash but if it was cash it's more likely that you're not gonna deposit each one individually you're gonna group them together and deposit them together possibly same with the credit card so to deal with that I'm gonna set up a new account which is gonna be a clearing account and I'm gonna try to set it up as a bank type of account so we saw this last time I'll do it a little bit more quickly we're gonna go to the accounting drop down I'm gonna go then to the chart of accounts and I'm going to make then in the chart of accounts another account now I can't just make a bank account by adding an account because it's a special bank account I want to make a bank account without being connected to the bank feeds it's gonna try to connect us to the bank feed so I'm just gonna pretend I'm gonna do the bank feed thing by clicking a bank down here but I'm not actually gonna do it I'm gonna say skip this I don't want to actually connect to the bank don't connect to the bank please and then I'm gonna say the account name is undeposited funds so funds we have or you can call it like a cash clearing account or the holding account a clearing account being different than a temporary account a temporary account mainly being referred to as the income statement accounts which roll into the balance sheet periodic a clearing account will go to zero periodically after they serve a specific purpose I'm just gonna call it an other type of account account number I'm just gonna say 555 just to give something there because it's a required field apparently and there we have it so now if I go to the accounting drop down and I look at my chart of accounts we've got this undeposited funds okay so then let's go back to the business form and let's go into our invoices and let's say that we're going to receive or have a payment on the invoice so I'm gonna say there's a payment let's say this happened on the 17th I'm gonna say it's paid to I could put it to the checking account which would in essence be a deposit right into the checking account at that time but I'm gonna put it into undeposited funds which is kind of a you know deposit there but that's really a clearing account that I'm gonna put it to so I'm gonna say paid I'm gonna do the same thing for this one a a a I'm gonna deposit it on let's say the 17th paid to undeposited funds and that's good so then let's go to our balance sheet see what happens update we've got the undeposited funds of the 3000 here we've got then the checking account which is in a liability because it's overdrawn so it's a liability because we owe the bank the money because it's overdrawn that's why it's down here otherwise it would be up here too now when I transfer it from here into the bank into the checking account I'm gonna transfer the full $3000 into the checking account why because I'm I am gonna check the checking account possibly using the bank feeds or using a bank reconciliation to the bank that's a huge internal control both large and small companies should do and if I was to put this in here as two amounts one thousand and two thousand separate sales but deposit them into the bank in one lump some either a cash deposit or through the credit card company it'll be difficult to reconcile so I want to make the reconciliation as easy as possible so I'm gonna deposit the full lump sum of 3000 that's why I have the undeposited funds to allow me to group in that fashion so now I'm gonna say okay now I'm gonna take that money the cash let's imagine and actually go to the bank and deposit it or the credit card and imagine the credit card cap company actually grouped the sales together and are gonna give me the 3000 those two sales grouped together deposited into my checking account so now I'm gonna go back on over and say add and I've got to record this as a transfer because it's going between types of accounts that we set up as checking accounts I'm gonna take it from the undeposited funds and it's gonna go into the checking account as of the 17th let's say again the amount $3000 and there it is so I'm gonna transfer and so so now we have the deposit back to the balance sheet update and we're gonna say now we've got the deposit the undeposited funds is now gone because it's back down to zero and if I go down to the checking account which is down here because it's a liability we haven't yet got enough money to make it positive yet but if we go into that we could say now the $3000 way down way down down down yonder is here and it's recorded here as basically a bank transfer and so notice that these whatever system you set up you want to get an idea and a feel for the source documents that are gonna be labeled here because that could help you to sort your data it was a transfer from the undeposited funds because our system is that we're gonna put it through the undeposited funds in order to group them in order to deposit it here as a 3000 instead of a 1000 and a 2000 separate amount because the 3000 is what's going to show up on the bank statement allowing us to match to the bank statement either using the bank feeds or using the standard bank reconciliation process which really is a mandatory internal control for any business large small will hopefully get into the bank reconciliation more in a future presentation so that's the general idea with the deposits now just remember the deposits are usually coming from the the end of the sales cycle so if I was to look at say that this process the deposits over here are usually coming from a customer in some way or another one they might come from the customer because you just had gig work and it came through and you recorded the deposit then or you made cash sales and then you went to the bank and sold the deposit and put it into the deposit or you said you entered a credit sale or a accounts receivable or invoice increase in accounts receivable got paid and then made the deposit but there are sometimes when you might make a deposit that is not related to something you got from a customer and that's usually when you start the business or expand the business where you're getting money say from the owners yourself if it's a sole proprietorship or the partners if it's a partnership or from a the shareholders buying shares if it's a corporation or you might get a loan so you take out a loan from the bank and you'd have a deposit so in that case you might have the same kind of form so you could still use like a receive money form for example and I would go into the receive money form it's going to go directly into the checking account and so but it would be from the bank or from you and we're not going to have any item that we sold here but rather go in directly to an account if it was coming from us we would we would need to have an equity type of account which might be retained earnings or a common stock if it was a corporation if it was an individual it might be into the an owner contribution account and if it was from the bank then we would just put it to a liability account like loans loans payable account down here in the liability so notice when when you're setting up your accounting side of things for the receivable side of things for the inflow of cash you you want to make sure that you can have a system that distinguishes the cash from customers and those more rare transactions of cash coming from you or the bank so for example if you just take all of your deposits from the bank feeds and record them as revenue as your common strategy you want to make sure that you have a system that can watch out and be careful of if you got a loan that was a deposit or if you the owner put money in otherwise you're going to record the deposit as revenue which will overstate your income statement right so if I if I accidentally pulled in my deposit and recorded it as revenue then it would be included in the sales line instead of being on the balance sheet as equity or as as a liability whether it be from me the owner equity or the bank liability loan payable and that will make you look good when you're better than you because it'll have more revenue than you really got but it'll be bad for taxes of course because you will end up paying income taxes if you're in the United States most likely on money that you didn't get from a customer but from yourself which was really an investment so you don't want to do that so you got to be careful of that as well