 In this presentation, we will generate, analyze, print and export to excel a balance sheet within QuickBooks Pro 2019. For more accounting information and accounting courses, visit our website at accountinginstruction.info. Here we are in the home page. We currently have the open windows open. In order to open the open windows, you want to go to the view drop down and open windows list. We're going to now go to the balance sheet. I'm going to scroll through the reports, most of the common reports with the drop downs. I'm going to go to the reports drop down up top. We're going to go to company and financials. Then we're going to scroll all the way down to the balance sheet. So it's a little bit difficult to find because it is on the bottom half here and it is the main report, the first report that I would consider looking at when thinking about the financial statements. So we're going to select the standard balance sheet balance sheet standard. And then we're going to change the date range. And I'm going to do that with the customized reports up top so we can change a range rather than just one date. So we're going to go to customize reports. We're going to change the date range from 010192 123119. That's the current year that we will be putting data into in this presentation in this problem. So we're going to say okay. And here's going to be our balance sheet. Now when we think about the balance sheet, it's worthwhile to just think about the balance sheet in general and in terms of how QuickBooks reports the balance sheet, how it's going to show the balance sheet, what kind of subcategories are there, how can we adjust these subcategories, what does the balance sheet look like that will be similar to a standard balance sheet that we might see in financial accounting most of the time. And what are some types of things that QuickBooks may do a little bit different than we may see what kind of terminology may they use or different little techniques that they may have and why might they do so. First thing to note about the balance sheet is it is as of a point in time. Although we entered a date range up top, notice it only shows the ending date. We don't need the beginning date in order to report the balance sheet. So that's the first thing to note the balance sheet is as of a point in time. It's where we stand as of any given point in time. And we can see that with these nice little drop down type features, these little triangles, that will give us a drop down. And this is going to compress information if we so choose or expand the information. And so on the most basic level then the balance sheet is the accounting equation. So if we select this little triangle up top on the on the assets section of the balance sheet, it'll compress all of the assets. And we can do that for the liabilities and equity. And you'll see in essence, that's the balance sheet in balance assets, equal liabilities and equity. So assets represent what the company has what the company owns, not just cash, but represented in terms of cash, meaning we value everything. In terms of dollars, dollars are measuring stick in order to value everything property, plant and equipment, supplies, inventory, we don't count those things we measure them in terms of dollars. So this in terms of dollars measurements, all the assets we have liabilities and equity is just the same thing, except equity and liability represents who has claim to these assets. So either a liability representing third party having claim to those assets, and then equity representing the owner having claim to those assets. And therefore you can also think of this as assets what the company owes minus liabilities, what the company who has claim other than the owners to those assets equals equity, the book value of the company, what in theory the company is worth, what in theory we could take away from with cash, if sold all the assets paid off all the liabilities and left the company remaining with the equity now cash to the owners. So that's the first component to look at. And notice all those thought process just means as of this point here. So if we're talking about the assets, that's what we have now in this point in time liabilities. That's what we owe now at this point in time. It's not talking about how we accumulated. Doesn't tell us anything about a story. It's just like a photograph, just a picture. It's not a movie. It doesn't go from point A to point B, time A to time B. Now let's expand these bit by bit and see what we have included in them. So we'll first start with the assets here. So we're going to say assets expanding. And then I'm going to, I'm going to unexpand their collapse, the fixed assets, the other current assets, and the accounts receivable. And we'll consider first the checking account. So the checking accounts going to have this little arrow once again, these are going to be that cash type of accounts we have. Notice that checking account in a normal financial statement, we would just call it a component of cash, it would be included in cash, all checking accounts would be included in cash. So if you compare this balance sheet to what we might see when we look at a balance sheet, if we were looking at a balance sheet of a corporation, if we looked one up, then we would probably just see cash on a standard balance sheet here, we have the checking account. So it's trying to give us more detail. If we have multiple accounts, then of course it'll give us multiple accounts within the checking account. If we collapse it, then it's going to give us something similar to what we would see on a financial statement, which would just be cash. So cash, checking account subcategory, giving us multiple accounts. Why would it do that? Because it gets more detail so we can kind of drill down in on this from the balance sheet, we could see the activity directly from here, we can list out the different kind of checking accounts that we have and see them as different line items on the balance sheet, whereas a standard financial statement, usually being prepared for third parties, just needs to group all the cash together. If there's multiple checking accounts, different types of cash related items, very liquid items, then they would just be included in one line item as cash. We don't need to know the differentiation for a third party typically, working within the software. However, if I have three checking accounts, we would like to see those listed out, because most people go to this balance sheet in order to look at that data and analyze that data. So then we've got the accounts receivable. So if we select the accounts receivable, notice this as with cash is under the current assets section. So we're looking at the current assets section, and we're breaking out accounts receivable, and it gives another subcategory to accounts receivable, which we may or may not see broken out on normal financial statements. The reason it's going to be broken out in QuickBooks is because the accounts receivable has its own kind of settings within QuickBooks, meaning there's a sub account for accounts receivable that's going to be tracked by customer. And so what QuickBooks is doing is listing all types of accounts that have been labeled as accounts receivable, whether they be named accounts receivable, or other types of accounts that are an account receivable type of account. And so those are the things that are going to be in the accounts receivable. We then have other current assets. So if we select the other current assets, we've got inventory, prepaid insurance, undeposited funds, these are going to be anything else that is going to be a current asset that is not the checking account and not the accounts receivable. And in a lot of financial statements, you may see all of these without these subcategories, without a subcategory of checking accounts receivable or other, they would all be grouped under the category of current assets. These are all current assets. And you could kind of do that here by by using these dropdowns. And if we wanted to report it this way, we could say, hey, here are the current assets. Here's the cash in essence checking account. Here's the accounts receivable. Here are the other current assets. If we want more detail, then of course, we can un-collapse these and give them more detail. And those are a type of subcategory and we'll talk a little bit about how you can use those subcategories more to get this bit of an advantage here in that you can go to the balance sheet, use it as a source of more detail by un-collapsing the sub-accounts or have less detail by collapsing the sub-accounts. So then we've got the other current assets and the total current assets. Next, we're going to have the fixed assets. So if we un-collapse the fixed assets, we have in our case, furniture and fixture and accumulated depreciation. Now, these are going to be more long lived assets, things that are going to be depreciable assets. And you can think of anything like a car would go in this items, buildings would go here, land would go here, these are things that we're going to use for a long period of time. Normally, they will be depreciated other than land. Typically, we will have depreciation related to it. For example, if we bought a forklift or something like that, we're going to put it on the books as furniture and fixture as equipment in this case. And then we are going to depreciate it and record the accumulated depreciation. So we'll talk more about accumulated depreciation when we get to adjusting journal entries and record that. But this is going to be, in essence, along another subcategory that we will typically see on the balance sheet. And notice the balance sheet assets are going to be in order of liquidity. So we've got the checking account, accounts receivable, meaning those are close to cash. And then we've got other current assets, things that are going to be converted to cash relatively soon, we would hope. And then things that are not going to be converted to cash, things we're going to use for a long period of time, they're there in order to help us generate revenue over a long period of time. Now we'll go to the liabilities in equity, starting with the liability. So let's compress equity for now, we'll compress the long term liability, other current liabilities, and the credit card. And so let's start here. So we've got liabilities, we've got current liabilities. Now that same kind of thing, same kind of concept current as we had with the current assets, current liabilities being things that are going to be due within a year's time period. So it's, it's almost more specific on the liability side, meaning if we owe something within a year, then it's going to be current if it's over a year, then it's long term. Now we'll talk more about what how do we determine that how do we put something in the current what about those areas where there's some long term and some long short term portion, we'll talk about those items. But the distinction in itself in and of itself is pretty straightforward. So something that's going to be due within a year current, other than that long term. Within there, we've got accounts payable in the current liabilities, our first account in current liabilities, typically, and that means we owe vendors, this is going to be our normal kind of debt, similar to like a credit card debt, where we, you know, we buy something on account, and we owe it's in the future, if we enter any bills into the system, they're going to go into the accounts payable account. It's another subcategory which we may not always see on financial statements. QuickBooks puts it in as a subcategory because again, QuickBooks sees it as a different type of account and account that it needs to track the vendor, we can't use accounts payable without a vendor. So it's a separate type in and of itself, not just by name. But when we look at the types in the lists, account types, it'll be a different account type. So anything that we list as an accounts payable account will have different characteristics than other types of accounts within current liabilities. And we'll talk more about that when we talk about lists. And then we've got credit cards. Once again, in a normal financial statements, we probably wouldn't have a separate, you know, subcategory for credit cards. But QuickBooks sees it as something different that it can account for a little bit differently and tries to give us some features within credit cards to track the credit cards and what is owed as opposed to what has been paid. And therefore it has another type that's a little bit different here. And it's going to say this is a credit card type, we've got the drop down also can be useful because when we report the credit cards, we may have multiple credit cards that we're listing here. And we can then have the detail of multiple credit cards, we can zoom in on them, we can use this auto zoom feature, double clicking on it and seeing the data of this, I'm just going to change the date back so we can see some data here, the actual making of what's in this credit card account. I'm going to close this back out using the little X up top. And we can also collapse it. So if I had five credit cards, we can collapse it and show a report that doesn't show the five credit cards or we can un-collapse it and show the details so that we can go in there and see the detail of them. Then we've got the other we got total total credit cards, we got other current liabilities. So if we select this item to expand it, we will then see that we have the loan payable current portion, payroll liability, sales tax liabilities. Again, a lot of financial statements may not have these subcategories and just list out current liabilities and not have these other subcategories, which may actually muddy the waters confuse us a little bit, but also provide us with that more detail. So this is going to be anything else that isn't an accounts payable or credit card that is current due within a year. We'll talk more about how the loan payable gets there. How do we know what if it what if there's a current portion, the long term portion, payroll liabilities, sales tax payable, other common current liabilities, things that are going to be due, we're going to have to pay them fairly soon within a year. So then we get to the long term liabilities and then total liabilities. So here's total liabilities. Be careful of the subcategories now because when you add up total liabilities, you got to add up just the total payables, you know, the total credit cards and the total current liabilities, you got to make sure that we're not duplicating as you consider adding up this information. And if you export it to Excel, as will do, that's going to give you that can give you some good easy practice to add this stuff up and see how it all works without without even a calculator, you can just use Excel and we can maneuver the numbers around if we so choose. So then we're going to go to the equity section, expanding equity within equity. Now equity in and of itself represents what is owed to the owner. So remember that of course liabilities is assets are pretty, people have a pretty good concept of assets, even if it's not a formal definition of you know, that's what the company owes, we own it because it's going to help us generate revenue in the future. Liabilities are kind of what we owe other people. So that's going to be owed to someone that we owe that they have claim to the assets of the company. And that was due to some past transactions, some past transact financial transactions. And now we're going to have the equity. That's usually a little bit more confusing for people equity means that's what is owed to the owner. So remember that the owner whether doesn't even matter what type of entity we are in this case, we're sole proprietor, whether we're a corporation partnership, the the business is always thought of from a bookkeeping standpoint as separate from the owner. So therefore the business we always think of it, whether it be a corporation, which is a separate legal entity or not as a separate entity, and therefore anything within the corporation is is owed to somebody, the corporation. And that means that the owner's equity is what the owner has claimed to what is owed to the owner. If anything within the corporation isn't business related, then the owner should take it out. For example, if the the business had too much cash, and it was owed to the owner, like the cash isn't helping generate revenue, then the owner could take it out. And so that the business should always be separate. And anything within the business should be there to help the business. And if it's not, then it should be removed from the business so that we can keep this separation of the business and personal. So the equity then represents what is owed to the owner within the business. Now within a sole proprietor, we're usually going to have the main account called the owner's equity. And it's kind of a funny account also because you never really post to owner's equity, very rarely. One, when we set up the accounts, which we'll do. And two, maybe if you have investments in the accounts, you'll you'll enter into equity. Then how does equity get there? It's going to be the accumulation of revenue over time, minus what we took out draws plus anything we put in investments. And we don't and so we don't put it in there directly, we accumulate this information in the income statement or profit and loss, which then rolls into equity. So we'll look a little bit more about that relationship as we go. But that's why the equity section is a little bit more confusing. You can also think of the equity as, of course, assets minus liabilities, it's the book value of the company. So as the assets and liabilities change, the equity will change in proportion because we will always be in balance. So what I mean by this income rolling into it, we can see this in this relationship between the balance sheet and the income statement. Just briefly, we'll talk a little bit more about this later. But this income is going to be broken out down here net income. That again, is something that we do not see in normal financial statements, they don't break out net income here. But QuickBooks is in doing that trying to show us Hey, this is how the balance sheet relates to the net income, which is on the profit and loss, it's trying to give us a hint as to how these financial statements are related. So in order to see that for now, we'll go to the profit and loss by going to the reports dropdown up top, go into company and financial, and go into the profit and loss standard. So reports company and financial profit and loss standard, we're going to change the dates from 010119 to 123119. That's January 1, 2019 to December 31, 2019. Now the income statement, we'll take a look at later. And we'll take a look at the relationships more and more depth as well. But just note income minus expenses is net income. If we're looking at the same time period here. And that's another reason we chose the date range that we chose, then this net income 106308 loss, if we go back to the balance sheet, should be 106808 loss. So that's why we never really enter anything into equity, this net income, if we if we go on to the next time period, 2020, we'll just roll into this owner's equity number. And it'll just keep accumulating as we roll in the income statement. So the income statement, the whole income statement is really what makes up equity in and what we give back to the owners in the form of draws, and what the owner puts in in the form of investments. So that's how the equity section is built. One of the more confusing things to think about how we calculate the equity section, there's a couple ways to do it. But conceptually, it's just going to be the book value of the company assets minus liabilities. And it represents the accumulation of profits over time plus investments minus draws. If it was a corporation note that the equity section would be the same in total, principles are the same, still represents what's owed to the owners, the owners being shareholders, in that case, the name of equities will change, though, it'll be common stock and retained earnings. And that's just because the owners are different, which is we're not we don't have one owner. So we don't call it owner's equity, it's the owner's equity, the equity of the owner, we call it common stock and retained earnings, because retained earnings is just a broad name for the earnings that have accumulated that are retained. And they're owed to the owners who are the stockholders, who we don't need to name, because every stockholder is just the number, they're all the same, they owe the same amount to every every one of them. If it was a partnership, we would have an owner's equity for multiple partners, and we would have to actually track them as we would vendors to know how much of this partnership is owed to each partner. So that gets a little bit more tricky, almost more tricky than a corporation in some ways, because we got to make sure to track the capital accounts well, so we allocate the proper amounts to the owners. Okay, so that's going to be the balance sheet. Now we're going to practice just printing this out, I'm going to practice exporting this, each time as we go and just getting used to sorting these documents as we go through some of these sections. So we're going to export everything within this section to one report. And we're going to just call it section two. So I'm going to export this item, we're going to create a new worksheet. Now, if you don't have Excel, you don't have to export it, but I would just practice saving it and storing it to a file and practice how would we label it, how would we zip it? And we're just going to use some book problems as if we're in a classroom and turn it in something and put it all into section one. In practice, we would be probably sorting it by date and client. So we're going to say create new worksheet, and that's going to open up a new Excel worksheet. And we're going to go to in a new workbook. So we're going to create a new workbook like a Word document, but an Excel workbook and have a new worksheet within it and export. So here it is. And as we are here, I'm going to unsplit the pains by going to the view tab up top windows and go to the split unsplit these pains and those little lines will go away. I'm going to go to the second item, which is the page layout. And that'll just give us an idea of what it'll look like on a print printed page. And you can also see that the headers are here if we're concerned that the headers won't be there, which was concerning to me sometimes, then they will be here when we print it. And then we'll go back to the normal view. And here's what we have so far. Now, the reason I'm going to do this is just to practice that the formatting in a couple different ways, we can sort this, this information by printing it to PDF files and emailing them. But we got to remember, how are we going to sort that? How are we going to group this information? How are we going to save this information? We could save it as Excel files, which can be nicer to the people we're given this to. And remember, depending on what we do, presentation is basically everything. If we make it look nice, we might be given this information to people that don't even know how to read it really sometimes. So if it looks nice, then that sometimes that's all that matters. But even if they're looking at it to know what it means, then of course, the presentation will help give trust that it's going well. So we want to make sure to present this information as well as possible, whether it be a school project, clients or employer. And so another way we can do it is just to give the Excel document, if that's something that would be useful, and we can have multiple tabs, or we can use the Excel document to better or better, I would think, make the PDF file. So we can have one PDF file with multiple documents. So we'll just keep on practicing some of those as we go, looking through these reports. So I'm going to change the name here, just double click in here, I'm just going to call this, I'm going to call it balance sheet one, I'm just going to call it balance sheet one, because we might make other balance sheets. And also note that if you go through here, you can see how everything is being calculated. So this is what I was talking about about what are those subtotals that we're looking at, we want to be able to recreate these and make sure that we can see how these are being built. And if you just look at some of these totals, then you'll be able to see what these subcategories are looking like, and get an idea of how to recreate this and maybe even want to recreate it over here, and recalculate these numbers just to practice putting this together. So we're going to go to file tab, we're going to go to save as we're going to browse. I'm going to put this on the desktop. We're going to put it into get great guitars. And we're going to put that into the reports. Gonna make a new one for section two by right clicking in this area, or we can go to a new folder up top, which may be better if you have a lot of folders. I'm just going to call it section two, section two. And then double click on section two. And then and then I'm just going to call this again section to report section to report. Now, if we were doing this for a client or something, we probably have it by client and then by date. But we're going to use sections here. Now I'm not going to worry about this item over here, because it's going to keep on repeating until I actually send it. And then I'll then I'll delete that. So let's close this back out. The other way we can print this is actually to print it. And we can print it to a PDF file. And we can also print it to a PDF file using the PDF printer. So I'm going to practice that now. We'll go to reports up top. I have the cute PDF printer, which is a free PDF printer, I do recommend any free I'm not recommending it particular, but any PDF printer that is work that works. And this is a free one is useful because then you can use any type of printing option and print to a PDF. And so I would get used to practicing that practicing that not just for QuickBooks, but any kind of program you'd use. And so I'm going to practice that and print this here and we'll print it. And as we work through these sections, we'll see how this reports will accumulate and the different ways that we can batch these reports. So I'm going to hit the drop down up top, we're going to go to the reports. And we're going to put this into section to and I'm going to call it within section two, we're going to call it balance sheet one. Okay. And again, if in practice, you probably want the date of the balance sheet and sort it in that format, but I'm just going to practice putting some of these reports in place by label. For more accounting information and accounting courses, visit our website at accountinginstruction.info