 Zero Accounting Software 2023. Write checks for expenses and prepaid assets. Get ready because it's time to become an Accounting Hero with Zero 2023. 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. 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 when applicable. So once again click the link below for a free month membership to our website and all the content on it. We are in our Custom Zero homepage going into the new company file we set up in a prior presentation that being Get Great Guitars. Duplicating some tabs to put reports in like we do every time. Right-click in the tab up top to duplicate it and then we're going to right-click on the tab again to duplicate it again. Back to the tab to the middle Accounting drop-down. We want to open the balance sheet report tabbing to the right Accounting drop-down. This time the profit and loss or income statement back to the tab to the left so that we can hit the drop-down on the range changing the range change to a custom 2023 end of that year and update the report tabbing to the right. The income statement looks like it has the proper date range. So we're good to go. Going to go to the first tab to do our data input. We are now going to do like normal checks that we might see say on a monthly type of basis. So these are going to be more routine transactions. Those types of transactions we might be able to customize and when we get to the bank feeds in a future course or section then these are types of things that we might be able to automate at least to some degree with the help and use of the bank feeds. Let's first take a look at a flow chart. This is a QuickBooks desktop flow chart but we're just looking at it to see the flows here so we can apply the flow in a normal accounting cycle in zero. So we're looking at the vendor cycle which you might call the expenses cycle. You might call the purchases cycle. It's the cash outflow cycle because at the end of the cycle whether we're on a cash or a cruel type of system we expect an outflow of money for goods and services. We needed to purchase in order to help us generate revenue in the business and or possibly outflows related to the purchase of assets which are still going to help us to generate revenue in the future at some point in time. So if we were on a cash based type of system which oftentimes small businesses are we would just use say a check form or a money out form and this is where you might use the bank feeds most often for small businesses. So the money going out usually we specialize on the revenue side in a particular type of thing. So the money coming in is all for a particular kind of thing. The money going out however has a bunch of different categories that we're paying for because we're paying for everything else to get done so that we can generate the revenue. And those are the kind of things that oftentimes we can automate as we do so with the bank feed so we can set up possibly the bank feeds as they come through. And then we can we can try to allocate the proper amount to the expense accounts as they actually clear the bank. So more and more these days most of the transactions that we make or a lot of them for many businesses are electronic type of transactions. And therefore that helps with the bank feeds because that gives a memo section on the bank feeds which usually has enough information to tell who you paid for a vendor. And that also now that you have the vendor name can help you to determine the account that you should be writing the expense to. Now once you've entered a couple checks a few over a few months then you could you could start to auto you could start to automate or repeat that because the checks that you will be writing in the future should mirror at least the same vendor and what not over time. So it becomes easier and easier as we do the data input in the accounting cycle because the accounting cycle should be somewhat repetitive. Now the other way we might deal with things is to enter a bill. So in a bill situation we're going to get the bill from the client. Remember the bill is a specific term for zero for the accounting software. It doesn't just mean the physical bill because we can use a bill in different ways in normal language. I could say I received a bill. I could say I build the client so it could be called a bill no matter which side of the transaction we are on. But within the zero software the bill specifically means we put it into the zero accounting system as a bill which increases accounts payable. So a bill for zero increases accounts payable. Whereas a normal bill might be something that we received and we just pay it off with a check. We don't enter it as a bill. So a bill within the software means accounts payables going up. So that would be an accrual system if we enter a bill accounts payable goes up. We would do that if we want to track in more detail our accounts payable and try to pay them as late as possible. And that would be maximizing our cash management strategy. Now remember small businesses probably won't benefit as much if they have sufficient cash flow to pay the bill if they just pay the bills as they become due. That's why many small businesses will be in a cash based system using the bank feeds to record their transactions. But as transactions get larger in dollar amount and more of them then there becomes a bigger difference between paying something today or 15 days from now. So that means that as businesses get larger they're going to need to track their accounts payable more and more because there's going to be a bigger benefit to doing so and trying to pay your bills as late as you can. Alright so we're going to talk about bills more in the second month. For the first month of operations we're going to be entering our expenses as if there were checks. We're going to be looking at our expense accounts to make sure that we can format them properly as we first put in the checks. So in the second month of operation it should be easier and again we'll talk about bank feeds more in a future course or section. Alright so back on over to zero then. When we enter the checks into the system we could do so by going to the accounting drop down and we could go into the plus button I should say. And so here's our bill and then we would have a spend money form. So we'd have a spend money form which is kind of like our expense form. If I go into that we select the account usually it's going to be the checking account and then we would go into the checking account. And then here is our familiar spend money form. Now note that if you're entering things directly that are directly expenses go into an account and you're not buying inventory items. Sometimes it might be easier to go into the register. So the other way that you could do this if you're trying to do this a little bit faster is to use the register. You could go to the accounting drop down bank account. And then you could go into your checking account here and say I want to manage and then look at my account transactions and then within the account transactions you can have a new transaction. And then this is going to be a spend money form. So notice this is just a little bit faster or truncated money form spend money form which is much the same so that's the two ways to get in there. Let's take a look at the normal full size spend money form. So I'm going to go to the plus button and say spend money now and we're going to say it's coming out of the checking account. So checking account and we're going to say OK. So this is going to go to now the first what I'm going to put in here is insurance which is a little bit tricky. So we'll talk about that in a second. So I'm going to I'm going to add a vendor safe insurance. I'm just making up an insurance name. And we note that if you're adding this in a bank feed which we'll talk about later but if you were to add this and say a bank feed the bank feeds will often give you the the memo the bank feed data which sometimes includes something usually does of that you could use for the name. But you got to make sure that you set up the vendor so that you add the vendor in the bank feeds because that'll give you an added searchable field other than other than simply the account. So I'm going to then say the date is on. Let's say the date is going to be bring that back on to Jan 26. Let's say we'll say Jan 20. What did I say 26. OK. And then reference if I if I pay it by check I'm going to try to put a check here. I'm going to say it's not going to be an item because we're not buying inventory items. So we just need the category. So I'm going to skip this and go on over to I'm just going to put quantity one and the amount is going to be 12000. And then in the account dropdown I'm going to see if they have the accounts. Now I'm imagining that this is one of the first times that we're setting up our expenses. So we were given a chart of accounts by zero. So the general rule will be I'm going to see if zero gives me a chart of accounts an account that I think is suitable. And if they do I will use it if they give me an account that is close in name but I don't like the name. Then I'll go into the chart of accounts and change the name so that I don't have two accounts that are similar in name which could lead me to post into two accounts. And if they don't have an account at all that is what I want then I will add an account. Now in this case we're dealing with insurance insurance has a has an accrual component to it that you may or may not kind of have to deal with. So it's similar to the purchase of equipment. Note that when you purchase equipment you basically have to put it on the books as an asset because the timing difference as to when you use the equipment or like a building for example. Even if you paid cash for it is so different than when you actually used the building to generate revenue that you're kind of forced to put it on the books as an asset and then allocate the cost with depreciation. Similar thing with other prepayments like insurance insurance is something that you are paying for before you get the coverage. So theoretically then you would want to put it on the books as an asset from an accrual standpoint and then allocate the expense with adjusting entries to the proper period that it was consumed in order to help to generate the revenue. Now if you pay your insurance monthly then you might not do that because because you might say well it's close enough so I'm just going to pay it per month. But if you pay the insurance like yearly then then you might need to break it out or something like that. So we're going to practice the prepayment item idea so we're going to put it into prepayment. So notice they gave me a prepayment account but maybe I would like to rename it like insurance prepaid insurance so I might go in and adjust that to prepaid insurance if I want to use that account. I'm going to say it's for 12000 so we're going to pay for a year policy I'll say for a year policy. So what's this going to do it's going to decrease the checking account and the other side is going to go into an asset not an expense account. Once I have this set up the next time I enter a check it might help us to kind of auto populate the check. And if I was using bank feeds then every time I pay this particular vendor and I have the memo I might be able to set up like a rule that it can automate the transaction. Alright let's save it and check it out. So save it and so it's giving me the check number that I want now if we weren't using checks and we're using some other form of payment then we wouldn't have the check number here. But I want that check number to tie into our mock bank feeds we'll talk about later. So I'm just going to say save it then and then I'm going to go into the balance sheet and update the report if we go into the checking account and check out the good old checking. The good old checking needs to be checked out and we're going to go down and we're going to say and we're going to see there it is 12000 there. The other side is going to the prepayments. Alright let's go back to the balance sheet and see the other side that should be in the prepayments. So we put it in the balance sheet. So here it is the 12000 in the prepayments on the balance sheet here. Nothing happened to the income statement. When will the income statement be impacted when we do adjusting entries at the end of the month or a year allocating the amount of the prepayment that we actually used in order to help us. Generate the revenue. We'll talk about that in the adjusting entry course or section. So I'm going to go back to the first tab now. Let's make an adjustment to that account name and I'm going to call it prepaid insurance. So I'm going to I'm going to go to the drop down up top and go to our chart of accounts. And I'm going to say I like that zero gave me an account but I would like to adjust the name a little bit. So here's our prepayments. I'm just going to go into that and call it prepay. Let's call it prepaid prepaid insurance. All right. Now if I had multiple prepayments I might use like a parent account of prepaid insurance and then or prepaid expenses and then have prepaid insurance and whatnot as sub accounts. But I'm going to use it. I'm just going to call it prepaid insurance. Take a look at the balance sheet. See if it updates properly. There it is prepaid insurance looks good. All right. Let's do another one. I'm going to go to the first tab. I'm going to go to the plus button and let's say we've got another spend money for spending money is going out of the checking account. And we're going to say that this is going to go now this I'm going to imagine is going to Edison Edison. So I'm going to add the vendor as we go. It's going to be a new contact for Edison. And I'm going to say this happened on Jan 26 again. And then I'm going to make a check out of it. And I'm going to imagine Edison is who we pay for the electric bill. So I'm going to say electric. Now we might want to put like the bill range here. You might put like what the payment range is that you're paying for or something in the description more detail would be good generally. And then I'm going to put one and the price. I'm going to put the amount of 620 and then the account. This is where we have to we have some ability to kind of think about which accounts that we want to set up. So the general rule I'm going to say did zero give me an account that I think is appropriate. And so a lot of times we'll put this under say utilities. So that's I'm going to see if they have a utilities account and see what they gave us here. So I don't see one and I don't see anything for electric electric. So then I would then say OK well I'm going to add then one for utilities. Now note that you might think that the electric should be broken out like if you had a big electric bill for your company. You might not combine it with say the gas or possibly the phone. It used to be for example that the telephone the gas and the electric might be under one account of utilities. But then the telephone became a pretty expensive line item. So it kind of got broken out by itself. So then a lot of times people had telephone separate line item utilities including gas and electric. Or you might have a parent type of account of utilities and then try to put sub accounts that are going to be grouped under the utilities customizing your reports so that you can see it as an extended income statement with the detail or you can collapse it possibly into simply a utilities account. So this is where you have most of a lot more choices oftentimes in terms of what expense accounts how you want to format your expense accounts in the reports and you want to get that down first when you do the first month of data input. Because going forward your goal is to be consistent and use the same accounts that were used you know basically in the past. All right so that said I'm going to put that into here and let's say that I want to put it in something with with a six maybe. So six let's say six three six three or six seven three zero. I'm going to say the number is I'm going to say add a new and then I'm going to say code is going to be six seven three zero. I think would be OK suitable and this is going to be an expense and the name is going to be utilities utilities and save it. All right. And then I'm going to go all right. Let's save the utilities and it puts the check number 1008 that's good. And so we'll say save it and check it out. So if I check it out we're going to go back to the balance sheet update the balance sheet and go into the checking account and check out that line item scrolling down. So we've got another check that's decreasing for Edison back on up going back to the balance sheet income statement tab into the right updating the income statement. And this time we did hit the income statement with our utilities account. Again you might put utilities here and then you can adjust the layout so that you can have multiple accounts under the utility account. And we might get into that in a little bit more detail later. You could have like a sub account type of setup. So so that's a formatting issue that we might talk about in a bit. But first let's do another one. I'm going to go back to the tab to the left drop down and go to another spend money form. This one I'm going to say out of the checking account we're going to imagine that this is going to go to a telephone company. So we're going to say this goes to Verizon Verizon and I'm going to make a new contact with that one. This one is going to be Jan Jan 26 again and then I'll make a check out of it. And then again you might I'm going to imagine this is a telephone bill. So you might put you know the range of what you're paying for for the telephone bill if you want some descriptions on it and then the amount. So we'll say the amount is going to be 410. And then once again we can decide the account. So do I want to put it under utilities or have another account. So I'm going to I usually I would break out the phone to another account. So I'm going to scroll down and say OK do I have I have my utilities. I don't see anything else here for the telephone. So maybe I'll make another account and call it 3740. Let's say 3740. I'm sorry 376740. Let's say should that work 6740. I think it will. So let's add another one. And I'm going to say 6740. It's going to be an expense type of form expense. And it's going to be telephone telephone expense. All right. And then I'm going to save it. Boom. There we have it. Let's record that. Let's save that one. And then it's going to say check number 1009. That's what I want to see. So then if I go back on over to the balance sheet update it checking account. It should be in the checking. But let's go on over to the income statement update the income statement. Now we have our telephone. Now again you might you might try to make the telephone a sub account using our custom layouts of utilities. We might talk about that later. Those are some of the options that you want to be able to think about. And many people get into they have most people have a tendency to swing too far in one of two directions with these accounts. One type of person will often have way too many accounts and they'll like maybe even with the sub accounts they tend to like to break every line item out so that they have all the detail. Now if you do that then you probably want to be able to collapse the accounts so that you can print a summarized income statement as well as a more detailed kind of income statement. The other tendency people have is to be on the other side of things. They group stuff together too much right. So they only have like three expense accounts and they grouped everything into like three accounts when with and that's not enough detail. So we so you want to find that happy medium and a lot of people kind of feel like there should be like something written in stone on which accounts should be used. There's best practices but nothing's really written in stone here. If the telephone bill was quite small it would make more sense to put it under utilities because you don't need the detail. But when it gets larger you would break it out and it kind of depends on the type of industry you're in as to whether it's going to be larger or smaller. So the general idea would be the gas bill on the electric are usually fairly small compared to other expenses and possibly you would group them together then because you can. But if you have a type of business where you use a whole lot of electricity then you probably want to break that line out separately so that you can see it and analyze how much you electricity you're using. Let's do another one going to the first tab. I'm going to go into the plus button and we're going to say spend money again spending money like crazy here. But we're going to be it's going to make us money so it's cool. So this is going to be staples. That's going to be a supply shop like an office depot that we're going to buy supplies from. I'm going to bring this back to January what did I say 26 is what I'm posting these in and you could put a description for what you purchased. Now if you buy something from like an office supply store like a staples office depot office max or whatever it gets a little bit confusing because you could buy just general supplies paper ink what not. And again you might want to track some of that stuff if it becomes expensive in terms of exactly what supplies you purchased ink paper and what not versus small supplies which you're just going to put into supplies and not track them as much most likely staples and what not. And then so so so that's going to be an issue and then you might be purchasing sometimes large pieces of the of equipment you might buy a desk or something at these office supply stores and then you would think you would have to put them on the books as an asset and depreciate them so you can so when we get in so when we get into paints like a staples or something you want to keep in mind the dollar amount and think well if it goes over a certain dollar amount it's more likely I might have to put it on the books as an asset if you're in the United States at least for taxes you might have to do it because you're supposed to then depreciate the item for taxes even if you're on a cashed based type system also if you have a lot of ink or something like that for supplies or if you're medical supplies you're buying from a medical supply place then you might want to track your supplies in a similar fashion as you would your inventory so you're basically your supplies would be kind of like inventory you might put them on the books as an asset and then and then reduce your inventory as you consume the supplies just like you would in a normal inventory tracking type of system there as well but we're just going to expense the supplies here so I'm going to say this is going to be 500 and then I'm just going to put them into a supplies account once again I'm going to see if zero gave me an account for supplies and so I don't see an account for supplies so I'm going to add them note that I think that the fact that zero doesn't give this extensive list of expenses is actually good because they give you the necessities and then you can build your own expenses list as you're as you're constructing your accounts which is more custom to you and you don't have this massive chart of accounts then which you're not using most of right if they give you it like all the different options which some other softwares do namely QuickBooks online does they give you this massive chart of accounts and you only use like 10% of it then you always you are always scrolling through this big list of accounts that you don't need unless you take the time to go in there and delete all the accounts that you're not using any case so we're going to go in here and say supplies so let's put this under that I'll just put it under the next line item six seven five zero alright so I'm going to say new six seven five zero it's going to be an expense type of account and I'm just going to call it supplies let's call it expense because sometimes you have an asset account which would be called supplies as well and have the same name so I call it supplies expense and let's go ahead and save that check number looks good save it balance sheet the checking account should be updated so that good let's go to the income statement that's where the new account will pop up that's where the excitement's at right now there it is the supplies okay so I'm going to go back to the first tab and I'm going to adjust the check numbers here which so that they match our our our mock bank statements so I'm going to go back to the first tab and if you don't do this that's okay but the check numbers won't tie out when we get to the when we get to the the bank reconciliations alright so let's go into the accounting and bank accounts and then I'm going to go into the detail for the managed detail and look at the transactions here so we got staples I'm going to adjust these numbers then because they got mixed up Edison should be 1009 so I'll show you how to adjust these numbers so I can go into Edison here and then I'm going to say hit the drop down I'm not going to edit the transaction but rather edit the the check number and then I'm going to say this is going to be 1009 and it's already been used but that's okay because I'm going to I'm going to fix that one the other one to error for the following reason already exist please enter a unique check number alright it won't let me do that so I'm going to put 1009 zero and then when I fix the other one I'll come back in here and fix this one so I'll save that and then we're going to go back in there again banking I could have gone to the cookie trail up top drop down transactions and so we've got then the 1009 should be Edison and then Verizon should be 10010 and then staples should be 1008 so I'll fix staples now that I don't have that 1008 anymore drop down edit and I'm going to make this 1008 and so that should be good because I don't have that one anymore I'm going to go back on over and I know this is tedious but we're going to go back on over and then hit the transactions and check out so now we've got 1008 and okay then Verizon should be 10010 should which I should be good to change now so I'm going to go into that one and one this one was 10010 save that and back to the account again and then drop down and I think I only have one more here which is going to be this one which I can get rid of that added zero I put in there so I'm going to hit that one and edit that get rid of that added zero 1009 okay so if you don't do that not a big deal but your check numbers won't exactly tie out when we get to the bank fees but you'll still be able to reconcile but there it is that's how you change those so we did that totally on purpose to show you how you could change those numbers so now let's go ahead and open up our trial balance and see where we stand because we're running long on time here we don't have the time for this man we don't have the time you're breaking your own rules we got to get out of here alright we're gonna let's go to the reports drop down to go to the reports drop down and we're gonna say this is going to be the trial balance and see where we stand at this point in time and hit the date range and this 2023 so this is where we stand so you can check this out the things that we changed checking account since the last time so if you tied out last time and you're off this time you would think you would be off on the checking account we put something in the prepaid insurance we put something down here into utilities telephone and the supplies expense so if there's any balance that is off then you might change the range extending their date range and then see if that changes the numbers if it does drill down on the number that has changed and and change the date