 0 Accounting Software 2023 Bank Feeds Matching Invoice to Deposit Get ready to become an Accountant Hero with 0 2023 Here we are in our custom zero home page going into the company file we set up in a prior presentation the Bank Feed file. 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 were 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. 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Let's go to the first tab and go into our banking information accounting drop down. We connected the bank or uploaded the banking information for the bank account and we're going to go to the accounting drop down and account transactions. I've added a couple extra transactions here by simply let's go to the reconcile by uploading another set of data. If you want to do a similar practice I just made a nice little Excel worksheet here and I put my data input in this format and then uploaded it similar to what we did at the beginning of the practice problem so we have some data in here. I'm going to say don't save. I'm going to go on 10 sometime in October I made those items so here they are. All right so now we're going to imagine a deposit type of situation where we're going to try to connect it to a little bit more complex of an accrual system that we have in our accounting system. So to see that let's jump on over to our flow chart and this is a QuickBooks desktop flow chart but we're just looking at the flow of the forms which is basically the same for any accounting system. And we're on the revenue cycle noting that the easiest kind of thing we can do if we're trying to automate everything is to try to wait till the deposit clears the bank on the customer side of things and then just record it with the bank feeds to revenue at that time with a deposit form. But we can only do that if we're using a accounting system or if we're in an industry like gig work or something where we're just going to be able to let it come through the bank like a YouTube or something like that and record it at that time. If we have to bill someone then we're going to have to have an accrual system in place. So for a law firm if we're a bookkeeping firm if we're a landscapers typically we have to do the work first and then invoice or bill the client. We call it an invoice because we're invoicing and that's the form terminology within zero invoice means that we're charging. We can use them interchangeably in normal conversation however so be careful with these terms of bills and invoices from a zero perspective. The invoice has a more specific meaning than it does in normal everyday language. It means that we're going to increase the accounts receivable and the other side is basically going to go to sales generally. When that happens nothing happens to the checking account the sales are being recorded when we charge the client when we send the invoice when we send the bill out to the client. And then we're going to receive the payment and then we could record the deposit. So notice there's kind of three steps here and you can think about well how would the bank feeds fit into that system. So normally if you're doing the full service accounting system you would invoice the client. You would track the accounts receivable then you would receive the payment and make the deposit either at that point in time or have an extra step that you would then make out of the deposit. And then the bank feeds would fit into that in step by matching to the deposit. You would not be recording anything with the bank feeds but simply helping with the bank reconciliation. However you can imagine a system where you're like well maybe I can match the bank feed deposit to the invoice and allow the system to do this next step right. So that might work in certain circumstances. So for example if you send out an invoice and then when someone pays you you say just wait till it clears the bank. And then when it clears the bank I'm going to try to tie out what cleared the bank with the bank feeds to the invoice. Now that would only like work if the amount hitting the actual bank statement is going to be the exact same amount as the invoice which often would be the case for larger invoices for example. But if you have a collection agency in the middle like a PayPal or a Stripe or something like that that's going to mess up your system because they're going to group a credit card company right. They're going to group multiple payments together and then deposit it into your account as a lump sum. So you're going to have to get a workaround to kind of figure that out. But if it's just like an electronic transfer and they're going to have the same amount hit your bank account as what was on the invoice payment by payment you might be able to connect the payments to the invoice. Now the reason we have this intermediary point right here of the received payment in our flow chart is that sometimes like I say if you have a credit card involved or cash is involved you might then be collecting multiple payments that will actually hit your bank account in a group sum as opposed to individually. Which means you might need to put the money into like a clearing account or something and then transfer it to the bank account so that you can connect from the bank account to what's in your books and reconcile possibly with the help of the bank feeds. So we'll talk more about that later. Let's look at this first method and we're going to say all right I'm going to kind of work backwards here. Here's the amount that cleared the bank. Let's imagine that before this happened before October 21st we entered in an invoice and then we're just going to wait till the invoice clears and try to tie this amount to the invoice. So if I was to do that let's make an invoice. I'm going to say plus button. We're going to make an invoice. And let's say customer number two this time and let's make it October 1st or something of 2022 October 1st let's say and tab through this and then we sold something. I will add an item. I'll just say we sold something here. One for two hundred or five hundred and ten dollars. I think it was five hundred and ten and we're not going to have any tax applied to it. So I'm going to say no tax. If tax was applied you can you know the tax would be calculated here and the system would still work. So I'm going to say sales tax tax exempt. So what's this going to do when I record it. It's going to increase accounts receivable by five hundred and ten and the other side is going to be going to the sales account which I'm going to apply here. Let's do that sales sales account. Okay. And so I'm going to I'm going to record that. So we'll say okay let's approve that and then complete the description field. It wants a description sales approve por favor and it is contact. Okay. So then if I go to the my balance sheet and update the balance sheet now we have in accounts receivable. If I go into the accounts receivable we've got the five hundred and ten that should be in here. So there's the five hundred and ten. I'm going to go back and then on the revenue side on the income statement update in the income statement I put it to the sales account. So if I go into the sales account we ought to once again have that five hundred and ten. Now I'm not going to I'm not dealing with the sales tax or anything but it would be a similar process with the sales tax because the next step we would assume is we collect the payment. Now normally if it was a full service system what you would be doing then is tracking your contacts right you'd be looking at your at your contacts and seeing if they owe you money and then reminding them that they owe you money. You could also track it in the business dropdown and invoices and sort your all invoices the ones that are awaiting payment. And then when you receive a payment on it then you would record the payment from the invoice at this point in time. Now note when you record the payment from the invoice if you get one payment per invoice then you can connect it to that individual invoice fairly easily. However if you have one payment that's being grouped together due to possibly something like a credit card company or something grouping multiple payments together you might have to collect two of them and deposit them together. If that's the case then you're going to have to use more of a full service system most likely because it's going to be easier to do that kind of grouping from here. If you also have other deposits that are coming in or other complications like fees or something like that then you might have to create another checking account which is a clearing account so that you can put it into the clearing account and then transfer it from the clearing account into the checking account so that it hits the checking account in the same format as what we'll be showing on the bank statement that we can reconcile with the use of the bank feeds. So I know that gets kind of messy but hopefully that'll make more sense as we go. If I hit the drop down here if I go back into my bank accounts I'm going to try to say well what if I can just wait till it clears the bank and then connect it to the invoice right. I can say alright what if I go to my reconcile over here find that payment again which was on sometime in October I believe October. Okay I picked up a different one I think I was looking before this one but I did it for this one here's the five hundred and ten. So notice zero is actually seeing a match here so it's matching it to an invoice it's not matching it to a payment so this is using that match system a little bit differently than you might think of usually. So remember what we've been doing normally is waiting till something clears the bank and then creating a transaction when it clears the bank. Normally when you're looking at the match what with what you would be thinking is I already made a deposit on my end. I did a full service accounting thing made the deposit and now I'm matching it to what is here in in the bank which means this process would not be recording a new transaction in that case. But rather helping you with a bank reconciliation in this case we're matching not to the deposit but to an invoice so that means that zero is still going to have to do this second bit over here right. So it's still going to record something what's it going to record it's going to record the reduction to the accounts receivable and and the deposit into the checking account even though we're using a matching function. So again that method you could see and some it would depend on the accounting system that you're in but you could see a system where that might work. Again if you're receiving payments that exactly match the amount of the invoice that you're charging and you don't have that grouping kind of problem that would be happening. So if I say OK let's match that then if I go to my balance sheet and I'm going to say update the balance sheet accounts receivable should have gone back down because they reduced the accounts receivable when we matched. So now we've got the accounts receivable had a receive payment form goes back down. So if I go into the receipt payment form was created from that bank fee transaction there it is. And we could see the detail tying to our actual invoice. So if I go into my invoice I can go back to the source document of the invoice the amount due is now zero. Very cool. All right back and then back and then we can say the other side. Let's go back again is going to go into the checking account. So it's going to go into the checking account and of course it deposited that money in the checking account of the five hundred and ten somewhere in October. I believe it's getting difficult to locate things here receive payment I believe that's the one. OK so so we have a nice nice ability to match there. Now if I go back and track that internally on the invoice. So let's go back to the first tab and go to the business drop down and look at my invoices. It should have populated this over here. So if I went to the awaiting payments that one invoice has disappeared because it's now been moved over to the paid item. So the internal tracking looks good if I go to my contacts and I look at my customers. Let's just go to the customers this time and I look at customer number two then it has properly recorded the amount here. Here's the invoice. Here's the amount that amount that has been paid on the invoice. OK so that you might be able to come up with a system that works like that. In future presentations will think about well what if you had a system where you had to have multiple invoices that are being grouped together by a credit card company or by cash payments that are being lumped together. Then you probably won't be able to match the deposit to the invoice. But we'll have to do closer to a full service accounting system and the matching that you have within the bank feed will not be recording a new transaction possibly if you already made the deposit but rather matching to the deposit helping with the bank with the bank reconciliations. Alright so let's go to the tab the right right click and duplicate the tab and just look at our trial balance as of now just to see how how neat it is that it's been being created just as we go. We're just making stuff out of the ether which is just amazing. It's just constructing on itself growing like a like a tree like an orange tree or something. I don't know why orange but so here's our balance sheet we have our balance sheet information and it stops down here on our retained earnings and then we have of course the income statement accounts just listed one on top of the other matching over here to what we have. On our balance sheet accounts that have the subtotals let's go back so I could see this properly if I may. So we have over here the debits equal the credits which is the same as saying assets equal liabilities plus equity so assets equal the liabilities plus the equity and then the income statement fits into the equity section and is broken out on an income statement. The performance statement given us the detail of the income statement 7459 is the 7459 whereas on the trial balance we have the retained earnings before the breakout of the added current period performance statement the income statement and then we just list the income statements down below it. That's why those two systems are the same debit credit assets equal liabilities plus equity two ways to say double entry accounting system.