 Zero Accounting Software 2023 Bank Reconciliation Month Number 2 Bank Reconciliation Reports. Get ready to become an accountant hero with Zero 2023. 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 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. Here we have a Western Digital WD Elements 20TB USB 3.0 Desktop External Hard Drive. We use as part of our backup system, noting that if you lower the number of terabytes of storage, the price will lower dramatically as well. When you're thinking about a backup system, you're usually thinking about an online system or an external hard drive system like this or ideally some combination between the two, giving you some redundancy. You can also work directly from an external hard drive like this, but there are some drawbacks to doing that. One being, if you use this as your primary drive you're working from, it's no longer a backup drive and you're going to need a backup system, possibly another external hard drive and or some kind of cloud backup system. If you're working on something that takes up a lot of short-term memory, a lot of RAM as you're working on it, such as video editing, the external hard drive can slow up the system. You might want to come up with some kind of system where you download the project you're working on to your computer, to your C drive, or possibly to a solid state drive, which is a much more expensive external hard drive as you do the work once the work is done, then save the project to an external hard drive such as this. 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. Here we are in 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 to duplicate it. Right-click in the tab up top to duplicate it again. We're going to do two more duplications to put our two bank reconciliation reports in. Right-click in the tab up top, duplicating again. And then right-click in the tab up top to duplicate again. Back to the first duplicated tab, the one that's the second to the end over here. Right-click into the accounting dropdown, open up the balance sheet type of report. Then we're going to tab to the next one to the right. Accounting dropdown income statement. I'm going to pick up a comparative income statement if you don't have that, a normal one will do. Tab into the right accounting dropdown, opening up the reports so that we can type into the search engine the bank rec. Because that's what we want, a bank reconciliation as it's thinking. Tab into the right one more time on the accounting dropdown reports. And another bank rec. Because we have two bank recs we want to be checking out in this summary here. Bank rec numero dos, numero number two. Let's go ahead and then do our ranges on the changes for the bank recs. Hitting the dropdown, I'll do a custom range. And we want jan one to fed to... Wait a second, hold on. We want feb one to feb 28. Feb one to feb 28. We want this for the checking account. And then the balance. I'm going to pick up from the bank statement for feb 101 5905. 101 590.05 and update it. Let's tab to the left same thing, but this time for jan, January hit the dropdown for january. And first and then january, the end of it january. Say it right. Say it right. I hate when you say january. January. January. January. Okay. 6124185. 6124185. And let's go ahead and update that one. And then tabbing to the left, the income statement is good. Tabbing to the left, let's format our balance sheet. I'm going to do a comparative one again. So I'm going to customize this thing. Let's bring it back to january. January, the end of the month. I'm going to custom layout. Edit the layout down below so I can put february next to it with a column side by side date column thing. And we'll just make this for february and update it so we can see those in a side by side, which is obviously super cool. All right. Let's go to the first tab now. And we did the bank reconciliation for two months of operations thus far. We did that by going to the accounting dropdown into the banking section over here. And we went into our banking information account transactions. And we had our three tabs. The account transaction tab represents the things that we entered into the system, not necessarily from the bank feeds, but independent from them for the most part in our practice problem. Now, if we entered it into the system, then it may have been matched out to the bank, but not necessarily. The second tab over here represents what we uploaded from the bank, or it would be the connection to the bank feeds. Everything through the cutoff date 228 should be reconciled if it came through on the bank feeds because that means it has to be in our books unless the bank was wrong. And so everything in here is basically reconciled out. The reconciled tab has nothing in it because we've matched everything out. That doesn't mean that we haven't matched everything from the account transactions out necessarily, but everything that came through from the bank feeds has been matched out. So the only things that are not matched out are things that we entered on our accounting side, which haven't cleared the bank, which is OK if these are outstanding items, which we expect to clear the bank, say in the following month, these then are going to be the items that we kind of back into whenever we do a bank reconciliation in software, these are the things that are going to be used to create the outstanding balances. So if I go back like this 350, for example, if I go to my bank rec over here should be part of the outstanding balances, which I can find in my outstanding payments, which are the, was it 350 or 360? It was, I don't even know where it was anymore. 360, 360. That's what I meant, because that's the one right here. So we can see that. See, it's outstanding. So that's what's being used to create and build. You can see how this all fits together, right? So let's go with our bank reconciliation. Let's recap for the January bank reconciliation. What we did last time is we had this beginning balance issue, and then we checked everything off to get to our ending balance for January. So if I go back on over here and look at the January bank reconciliation, we can see that that 88, 645, 25 matches what's on the balance sheet in January as of the cutoff date or the point in time, 8864525. That is what is here. And then we've got the outstanding payments and outstanding receipts. So if I scroll down here, these are the outstanding items as of the cutoff date for January, which we wrote in January, but had not yet cleared by January 31, same with this one deposit. Those were the reconciling items to get us then to the balance of 6124185, which matches what's on the bank statement here. Then in February, this 6124185 is what's on the February beginning balance, therefore eliminating that beginning balance issue. So now in February, we have that 9525906. That's what's on the balance sheet. That's on our books as of the cutoff date of February 28 now. And then we have the outstanding payments and the outstanding receipts. So if I scroll down, we've got a different kind of set of outstanding payments noting that if they were outstanding in January, we would expect them to have cleared in February. However, that's not necessarily the case. And that could quite not be the case if you write physical checks because it could take more than one month for something to clear in that instance. If you have electronic transfers, you would expect they would certainly have cleared within 30 days. So this one, for example, this $500 is quite skeptical, is the most skeptical one here. We're saying, well, what's going on with this one? Is that a legitimate payment? Did it get lost in the mail? Did the check get lost in the mail? Did we enter it twice or something like that? Because you would think it would have cleared at this point, at least if it was an electronic transfer. The rest of the ones that we wrote in January, if I go back on over here, these outstanding payments in January cleared in February. They're not here anymore. They are no longer outstanding. All of the outstanding items are items that we wrote in February. And these all happen to be at the end of February, which makes sense because those would be items that we have entered into the system, possibly checks or even some other form of electronic payment that we're entering first, that the bank hasn't processed yet. Therefore, they are outstanding. We can verify if they're outstanding by seeing if they cleared in March. If they cleared in March, it's not like this whole process was useless. You might say, well, the only point we're trying to do is figure out if these things actually cleared and if they actually cleared, then it's kind of a waste of time. Or what if this amount was only a few dollars? It's immaterial. Why does it matter? Well, it matters because we want to verify the balance as of a point in time exactly, not just to verify the checking account, but also to verify all other transactions that are flowing through the checking account. If we can get the reconciliation to the penny, then that's verification that all the transactions are accurate for the most part. And so that's what we're trying to do here. So we want to double check to make sure that these are legitimate numbers and that they cleared and that there's nothing wrong with these transactions. But that's not really the ultimate point. The ultimate point is to verify all transactions flowing through the checking account, giving us a double verification on all double-entry accounting transactions within our double-entry accounting system. Now, these are the outstanding receipts. These are deposits that have not yet cleared. There was only one outstanding deposit as of the end of January. It cleared in February and is no longer outstanding as we would expect. These two, we would expect to clear in March. We can double check that. If they did clear in March, that's great. It doesn't mean they're no longer outstanding. They just make up the difference as of this point in time. So now that gives us our reconciliation, our verification, and this ending number, 101-590-05 ties in exactly to what's on the bank statement, remembering that this number will not likely tie out exactly to what's on your balance sheet at any given time unless you're constructing your entire books directly from the information from the bank. If not, you're still going to have these timing differences generally and you're still going to want to reconcile. Even if you are constructing your books directly from the bank, you still want to have an idea of your reconciliation report because that will help you to determine if you have entered something twice, for example, or if you had not entered something, something didn't pull in from the bank feeds or something pulled in from the bank feeds two times, then the reconciliation report will help you to discover that. So just in general, notice that that second bank reconciliation was a lot easier than the first bank reconciliation and going forward, whether you're constructing your books directly from the information from the bank or you're doing a full service accounting system where you will have a difference between the book number and bank number due to outstanding deposits and checks, the bank reconciliation after that first one, dealing with that beginning balance issue, should be easy. So this second month is kind of representative of how they should kind of go going forward. It shouldn't be a tedious, cumbersome process. If it is a tedious, cumbersome process, it's probably because you're trying to do things like combine things together for the deposits in the bank reconciliation and what you really need to do at that point is refine down your accounting system so that the bank reconciliation is, as it should be, just a pretty easy reconciliation task to do.