 Zero Accounting Software 2023 Bank Reconciliation Month 1 Overview. Get ready to become an Accountant Hero with Zero 2023. Here we are in our first award 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. Acer 27 inch monitor. I've been using an Acer monitor as my primary monitor for a few years now. This is the first Acer monitor that I have used after having used a series of different brands of monitors in the past. The Acer monitor has been performing well and I'm trusting the Acer brand more and more as I use the monitor. I have a 27 inch monitor which I think is ideal for what I do which is of course the screen recording and the editing. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com where we have many different courses. You can purchase one at a time or have a subscription model giving you access to all the courses. Courses which are well organized, have other resources like Excel files and PDF files to download and no commercials. Our custom zero home page going into the company file we set up in a prior presentation. Get great guitars duplicating some tabs to put reports in like we do every time. Right click in the tab up top so we can duplicate it. Right click in the tab up top again duplicating it again. Back to the tab to the middle accounting drop down we want to go into the balance sheet. It's a slightly modified one but if you don't have the modified balance sheet you can open the standard balance sheet. Tap into the right accounting drop down comparative income statement. If you don't have a comparative income statement you can open the standard income statement. Let's go back to the middle tab and now we're going to be thinking about our bank reconciliation. We've done two months of data input and we're going to do the bank reconciliation for month one then month two noting that month one often has added kind of issues related to it and most of the times those added issues are because we probably had some bank activity that was happening before we started our accounting in zero. In other words even if you have a basically new business oftentimes people have already set up some of the items of their business before they kind of start up their accounting software such as the checking account so they might have their own business checking account that's already set up already has a balance in it already has some transactions that have happened before starting the zero software and or you might have had a whole nother accounting system prior to using zero in Excel or some other software until you leveled up to the zero here then that means that you can have to pull in these beginning balances as we did here when we first started the system into into zero to have the beginning balance into the system and then you're going to be entering data that happens for the current period so in our case we started our accounting system for the current year of 2023 and any data we had in there from the prior accounting system for the prior year we entered in as a beginning balance in the checking account. Now the problem with that one problem that could happen with that is we might have some outstanding items that were involved when we pulled over the beginning balance from our prior accounting system and so we'll have to deal with those when we go through the bank reconciliation so that's a common issue for the first bank reconciliation which shouldn't be there for following bank reconciliation that's why we want to do two side by side to do the more difficult issue that kind of comes up sometimes with that month one bank rec and then do a month to bank rec where it should be similar to what you would expect going forward which hopefully will be much easier. Let's go to the first tab just to note where the bank reconciliations are now remember whether you turn the bank feeds on and have bank feeds on or not as we talked about in the prior presentation you still have the bank reconciliation that you need to do in order to bank in order to make the report of a bank reconciliation report so you're still reconciling to do the report of the bank reconciliation it might be easier or more difficult depending on the type of flow that you have so we're going to go to the accounting drop down and let's go down to our bank accounts and within the bank accounts we've got our list of accounts now we don't we're not connected to the the bank feeds now we have a whole nother possibly we're going to do a course or section on bank feeds and then we'll possibly do some bank reconciliations when we construct our books just basically from the bank feeds but you still have a similar process whether you have the bank feeds on or not I'm going to go into our checking account here and we want to reconcile the account reconcile the account that's where we go to do that and then note here you've got the statement balance and the balance in zero and here's the difference now we're not actually connected to the bank so we're gonna have to do it manually with regards to the statement balance three tabs down below we've got the reconcile tab nothing's in it yet because we haven't reconciled we've got the bank statements information nothing's in it because we aren't connected to the bank and we haven't put in the banking information yet we'll talk more about that in the future and then we've got the account transactions this is our data input side that we have put into the system not with the use of the bank feeds but with a normal accounting process and system that we would need to reconcile by tying out two items on the bank statement the status on the right hand side showing them as unreconciled because we haven't done the bank reconciliation process at this point let's also open up a bank reconciliation report zero being interesting in that you can kind of look at the bank reconciliation report before doing a bank reconciliation so it's a bit different layout than other software that you might have seen such as a quick books online it's kind of nice I'm gonna go to the tab to the right right click on it and duplicate that tab we'll go into the accounts accounting drop-down and let's go into our reports and I'm gonna type in the report I want which is a bank reconciliation report bank reconciliation we'll pick up the new report not the old report we want the new and hopefully improved report we're gonna change the dates I'll hit the drop down and do a date range let's do a custom range and go in from January to so January 1st and we're gonna go to January 31st January 1st to January 31st so there we have it and in the bank account if I hit the drop down that we want is the checking account that's what we're gonna be working on and then it's got this interesting thing where you can where you can manually put in the bank statement ending balance which we would get from the bank statement so these aren't from bank feeds you'd still get a monthly bank statement which is what you would typically want if I go into this we're at 6124185 so I'm gonna go 6124185 and then update this report now we haven't actually done the bank reconciliation so it's kind of interesting we can look at the report as we basically do the reconciliation so the bank balance your bank is showing and statement balance calculated must match if the balances don't match you'll need to identify why and fix any errors so obviously it's not gonna match because we haven't reconciled at this point in time but let's just take a look at what they have down here so we can see the layout of the reconciliation so we've got the summary this is the balance in 0 88 10 25 so if I go to the balance sheet over here let's change the date in this one to just look at it for January hitting the drop down up top custom date range let's bring it back to January January 31st only one date because it's as of a point in time we have here then 88 8 10 25 now note the problem of course is that that balance as of one point in time January 31st 2023 does not match what's on the bank balance as of that point in time which could be because there's errors meaning things that we haven't entered or have entered incorrectly or something like that and or it could always be off because there's gonna be timing differences possibly things that we know about and have entered but which zero does not know about such as outstanding checks and outstanding deposits so that's kind of what we're tracking in the reconciliation report over here so you see if they have the balance in zero and then you've got the outstanding plus the outstanding payments less the outstanding receipts now notice they're not all outstanding they're outstanding as of this point in time because we haven't yet done the reconciliation process so it's not yet calculating this subtotal right here you would think it'd be calculating this statement balance which is calculated which would have to then match out with this balance so it's not calculating that at this point we'll take a look at it later but you would think if these were calculated as outstanding because we haven't yet clicked them off as having been cleared we'd have the 88 810 point 25 and if there were outstanding outstanding payments that we knew about that the bank does not know about then this is our balance which we have already included those decreases in so we would have to add them back to get to the bank balance so I'd have to say plus that's why it says plus here the 113 333 3.1 minus the the outstanding deposits which again would be the ones that we know about but the bank doesn't therefore they're included in our balance and not in the bank balance which is why we would say minus the outstanding deposits 202 143.35 and so there we have it so that and that comes out to zero that it did calculate it so we're at zero here on our calculation that does not match of course the statement balance so we're off by the 61 241 85 and then if I scroll down we're going to say the balance in zero is this here's the layout of the outstanding payments now outstanding payments mean that we knew about it we wrote a check for example that didn't clear the bank they're all showing as outstanding because we haven't done the reconciliation so as we do the reconciliation we should be able to kind of check these off and and they'll move from here to have been been they'll move out of here to having been reconciled they won't be part of the difference less outstanding receipts same for the receipt side of things and then the statement balance so it's kind of interesting that we can kind of see this report as we do the data input into the system okay so let's go to some other kind of beginning balance issues if I go back to this first tab over here notice that this information that we put into the system is basically the data input that we're putting in during a particular period now when we started the new company file we had some information in the bank account before we started in zero this is a common thing because even if you're starting your business from scratch and starting it with the excellent zero software right from that point in time it's possible that you started you know having banking transactions before you officially moved on to accounting software so so you might have to enter the beginning balance and kind of start your accounting software from one point going forward as we did in the beginning of our practice problem or you might have another accounting system and you're upgrading to zero and so you're putting your information in here and then you had to pull in that beginning balance to start the new the new system from the prior accounting system so if I look at a bank statement then what that would look like usually on a bank statement is you're gonna have the beginning balance notice that this beginning balance doesn't match the beginning balance that we put in place that's one of the big issues that come up with this beginning balance issue when you do the first bank and reconciliation for your your accounts and then you've got the transactions the additions and the subtractions which are usually summarized down below in in a summary format so this is our mock bank statement now note that you do want to have your mock bank statement as of you know whenever they process your bank does the bank statements which is usually monthly right you would like to have the monthly statement because that has a definite cutoff allowing you to have the beginning balance which will tie out to the exact ending balance of the prior bank statement if you try to just run reports from from your online banking and look at the transactions then then you're not gonna have that that definite cutoff or it's less easy to see that definite cutoff so although you want to possibly get the transactions from the bank feeds or download transactions and upload them into zero you still kind of want to do the bank reconciliation with a bank statement which has those definite cutoffs so that you can you can double check your your reconciliation as of a point in time now this so the be so the issue here is this 30,000 was actually put into the system prior to the start of our accounting system in zero we've reflected that by putting the information in zero in the beginning balance over here but we only put 25,000 in here why because that was what was on the balance sheet in our prior accounting system in other words the balance sheet amount as of 1231 22 the end of last period doesn't tie out to the beginning balance which should be the same as the ending balance of 1231 22 beginning balance January 1st 2023 it's off why is it off because possibly there's outstanding items so that means that there were outstanding checks and deposits so we had to pull in the amount from the prior accounting system in order to make our books balance but it was still off because the prior system had outstanding checks and deposits that we need to account for in the current system that's the big issue that often comes up when you do that first bank rec once the first bank rec is done you no longer have that issue because the ending balance here for example will always tie out to the beginning balance of the next bank statement and therefore things should be quite easy going forward so a lot of times you can kind of see this issue like I can say okay there's 30,000 it's 25,000 when I put it into the system well what must have happened there's probably outstanding checks for the difference now now if they were outstanding checks checks that you wrote in December which did not clear until January then hopefully they clear in January the current month that you're in and you'll see them on the bank statement so I'll see these checks for example and these are the two checks that make up that five thousand dollar difference notice so these two checks will clear and what's going to happen is I'm not going to be able to find these two checks in my data input in 0 why because I didn't start doing the data input in 0 adding new checks into it until until January and these checks although they cleared in January were written in December which is why they were outstanding so so if if the checks clear in January the problem will kind of fix itself and you'll be able to kind of figure it out or at least kind of move forward even if you would don't fully understand this problem but if these checks don't clear in January then you're probably gonna have this issue and you can and it's gonna roll forward so that's one of the issues that will have to deal with another issue will have to deal with is that this 30,000 right here is the beginning balance but over here if I look at my bank statement there's nothing in the statement balance over here and even if I connected to the bank feeds it might be the case that that's the case there's nothing in the bank balance or it might be different than what's on the bank statement for example because what we're pulling into zero even if connecting to the bank is just the activity for a time period we're not pulling in the ending balances so if I'm pulling in the activity on the bank statements for the month of January then it's not pulling in the activity of what happened prior to January it might try to do that if you connect to the bank feeds we'll get into bank feeds later it might try to pull in the beginning balance but if it does it'll have to do a random journal entry so you got to be really careful with that but in any case you're gonna you might have a situation where the beginning balance doesn't tie out now we what are we gonna do about that like how can I get the beginning balance there you might you know you might do some research you might be able to kind of get the beginning balance in here but I think it's the easiest thing to do on the first bank reconciliation is just to say hey look I already got the beginning balance I just entered it in as a transaction as of December 31st 2022 so I can just mark it off as cleared it's not the same number 25,000 versus 30,000 because of those two outstanding checks but what I'm going to do to solve this problem is I'm just going to check it off instead of putting it at the beginning balance just as something that cleared during the period and so as long as I denote that in my report and I can understand what is going on in my bank reconciliation we'll be able to check it off and be able to move forward without without much of an issue so those are the two big things with the beginning balances that will that we need to deal with now as we start to check things off within zero oftentimes it's useful to actually upload the information to zero even if you're not manually connected to the bank feeds so that's what we're going to do so and you can you can go to your online banking and basically download the activity even if you're not connected to the bank feeds in the format of like a CSV file so we'll do that next time and show you that that will upload it and that activity will just be the activity this stuff all the detail which is summarized by these two lines what it will not include is this item right because it's only showing the activity so we'll we'll import that and then we'll want to make comparisons between what cleared the bank and what what is on the bank statement and hopefully everything should tie out well if it's on the bank statement and it's not on our books it's likely that we'll have to fix our books unless the bank is wrong which isn't usually the case if it's on our books but it's not on the bank statement then it might be the fact that we just have outstanding checks and deposits therefore it might not necessarily be wrong it might just be something that's a reconciling item that will go into our reconciling report as an outstanding item so we'll see how all that is constructed in future presentations we'll do this one at a time we'll talk about deposits and then we'll talk about what will upload the transactions then we'll talk about deposits and we'll talk about the withdrawals