 QuickBooks Online 2023. Record short-term investment in stocks and bonds. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our get great guitars practice file. We started up in a prior presentation using the 30-day free trial. We also have opened the sample company. If you want both of these open at the same time, we suggest using the incognito window or another browser to do so. You can get to the incognito window by selecting the three dots up top in the browser if using Google Chrome. 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 further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need then 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. And opening up the incognito window then typing into the search engine QuickBooks Online test drive we're using the sample company to look at the difference between the accounting view the view that get great guitars is in and the business view the view that the sample company is in. If you want to switch between the two views you can hit the car drop down and switch the view on down below. We're going to open up a couple tabs in order to put reports in our major financial statement reports the balance sheet the income statement as we do every time right click in the tab up top duplicate in the tab right click in the duplicate a tab to duplicate again as the tab to the right is thinking we're going to go to the tab to the left and the reports on the left hand side opening up in our favorite reports the balance sheet standard if you're in the business view by the way the reports are located in the business overview and then the reports back to the stamp to our get great guitars tapping to the left actually I'm going to keep on on to the right now and then go down to the reports again opening up in our second tab the P&L the profit and loss report and then now let's close up the hand boogie let's change the range we're working in 2023 so 010123 tab 123123 I'm just going to put the whole year January through December 2023 run it there's nothing there because we haven't done anything for the profit and loss thus far tab to the middle close the hand boogie scrolling up changing the range in from 010123 to 123123 and run it to refresh it that's the setup process that we do every time so in prior presentations we set up the company file we then put our beginning balances within the system and now we're thinking about those types of transactions that are often done when you first start the company so let's just give a quick recap of that if I close up and just look at the accounting equation you'll recall that the the assets represent what the company has they have them in order to help us generate revenue the equity and liabilities are how we financed the assets the reason we're buying assets in the business and not outside it is because we think we can get a return on it meaning income on the income statement side of things in the future so how did we get the assets well we're going to first need capital that means the last time we focused on the the primary two things we start out and we start a company to get capital we put money in ourselves as the business owner or we get a loan so we did those transactions which aren't normally done on a day-to-day basis but they're often done when starting or expanding a business then we're going to use those assets to purchase property plants and equipment oftentimes the major machinery that we might need or whatever we're going to buy in order to generate revenue in the future but before we do that we're going to we're going to say that we put more we got a decent amount of capital here that's just sitting here until we actually buy what we're going to buy for the assets we might want to put some of it in an investment account so we're going to put some of it in an investment account the idea here being that we're not holding it in an investment account as our business structure meaning this business is in business to sell guitars generate revenue that way and have guitar lessons and whatnot not to generate revenue through investments in stocks and bonds generating revenue revenue with dividends and interest some businesses might be in that business but that's not what this business is designed to do so what i'm trying to emphasize is the fact that if we had excess cash due to the business doing well and we we we then would want to if we had excess cash we're not going to use in the business give it to the owner so the owner could invest meaning draw it out of the business so the owner can invest it in stocks and bonds or whatever investments they want to do the reason it's in this business is to achieve the business objective revenue generation from selling of guitars and whatnot but we might put some of it in a short term holding account so that we can hold on to it until we're ready to to spend it on machinery and equipment that's the general idea however you can also have quickbooks being used for your personal bookkeeping as well it works quite well and in that case you have a different objective it's your objective is basically to live well but so the accounting is actually a little bit more confusing in that case but you might then organize your your investments in in general in in the quickbook software and so you can kind of apply this concept to that as well we'll kind of touch on that okay so we're going to take the money out of the checking account and put it into like an investment we're thinking like mutual funds for example or a money market fund we'll just imagine stocks and bonds that we're going to put money into and so there's a transaction for that now how can we do that well we know this cash account's going to go down the other side's going to go into some kind of asset account for investments when I look at the forms up top and say well which form should I use there is no form designed specifically for this transaction because this once again like many of these beginning transactions is not something we expect to happen on a day to day basis in the future however so then the next question is cash affected yeah cash is affected because it's coming out of the checking account so we could use an expense form or a check form to decrease the the to to record the decrease in the checking account so if I go into an expense form for example then we have our categories and I can then apply it to a category down below for our our category so however oftentimes I think it's easier to enter it into a register so notice of course if you were using bank feeds and you had something coming out of the check feed the checking account and you were recording your books with bank feeds as we'll do in another course or section then it would still record in essence an expense form if we're entering our information manually then sometimes the easier way to enter it if it's a checking account thing is to use the register so let's try that I'm going to use the register I'm going to open up the hamburger on the left scroll down a bit holding control scroll down I'm going to go into the register which is under the accounting view in uh the accounting view it's under accounting and then the chart of accounts in the business view by the way the register is located under the bookkeeping and then the chart of accounts so there it is in the business view scrolling back on over so we're going to choose the register let's close the hand boogie so now we've got the register note that it's not just for the checking account but all balance sheet accounts you have this kind of register functionality if I go into the register we can record our transactions directly in here in a little bit faster format so we've got down here add deposit if I hit the little triangle these are all the forms that can be used for transactions that are going to be hitting the checking account so we're going to use an expense form which is similar to a check form with no check number it means in QuickBooks that it's a form that's going to decrease the checking account so I'm going to say this happened on 010423 and then the payee let's make a new one I'm going to make them as we go here so if I hit the dropdown we don't have one for I'm going to say it's Vanguard so you could just type it in here a lot of times I type in whatever the new vendor is and then hit tab and it'll then ask you to add it so we have vendor or customer it's not really either because it's an investment company but of the two I think the vendor would be more appropriate so that's the one I'll pick and then I'm going to say this is an investment in the memo it's going to be a payment I'm going to say 12,000 going out of the checking account into the Vanguard note that you will keep it there and then if I select the dropdown we don't have anything here yet for an investment account in Vanguard so we're going to go through our normal process we were given the chart of accounts by QuickBooks when we set it up so if there's an account that is applicable I will use it if I don't like the name I'll change the name I don't believe there's any account that is going to be applicable for the investment account that I want so I'm just going to do the same thing I'm going to add a new account I could add it up top by adding a new account but I'm just going to type it in here and that helps me to kind of double check that the name isn't there I'm going to say short term investment short term investment and then I'm going to say tab and once again we get the dropdown window that's going to help us to add the account so here's the account type it's not going to be a bank account it's going to be an other current asset account and then this one the detail the detail type I will put in here is not as important so I'm just going to say like other current asset so I'll just use the generic other current asset short term investment that's the key thing we want description we're going to I don't really need one I'm not going to make it a sub account of anything now note as we're here with these sub accounts I just realized that if you have multiple investments then you might use the sub accounts to kind of group the investments together we'll talk about that a little bit more when we see what happens on the income statement so I'm going to save it and close it and so that looks good it looks like it should do what we wanted to do so let's go ahead and save it boom and then I've been doing this on the balance sheet tab for some reason so I'm going to open the balance sheet back up because I messed that up so I'm going to go reports balance sheet change in the range in up top from 010123 to 123123 run it to refresh it close up the hamburger and then in the checking account we should have a decrease so if I go into the cash account here and I say okay we now have a decrease there it is it created an expense form even though we use the register the other side in the split account is going to the short term investment if I go into this form we open up not the register but an expense form the expense form being the form used to decrease the checking account that there's also a check form which is basically the same thing but it has a check number in it so let's close this out and that looks good I'm going to go back and then we could go to the short term investments here is 12,000 in short term investments so we have that as well looks good no impact on the income statement again because we're kind of just setting things up that this would be what you do generally at the beginning of your business process you got to get the investments in place and so on maybe not this investment but you got to get your investments in the company the cash to then invest in the assets fixed assets okay so now let's just take a quick look at some of the issues with regards to investments now if you're a business and you're and you have money in the investments so then then you have a question of how you're going to report later income or increases and decreases in the investments so if you're invested in say stocks and bonds for example then you're going to get dividend income and you're going to get interest income now from a logistical standpoint you might receive the dividend income and investment income and it might then go into the checking account if that happens you might have like your bank feeds set up and then as you receive those items you're going to record them to income on the income statement when you record those things to income oftentimes you might not want to put them as normal income at the top of the income statement but rather at the bottom of the income statement as other income why because that's not what you normally do in this business for income this business is selling guitars and whatnot and therefore the investment income is at the bottom because that's just some random income we've got that isn't part of our principal business so that's the first thing to kind of note also you might roll in the income and reinvest it as you receive the income which makes it a little bit more complex to record automatically because you're not going to get the bank feeds that are showing you the income as they come in you'll see them periodically as you check your investments so then the question is when I when do I check my investments and how do I alter or adjust my investment accounts as the investment changes over time do possibly to the dividends and interest that are accumulating and possibly due to the fact that the underlying stock is changing in value so one thing to note note that QuickBooks is not here it's not the kind of software where you're going to track the day-to-day investments in this in in the stocks and help you for day-to-day trading there's other software that you can do that it's also not a software that's going to be updated at you know you can't connect it you might think well can't I connect it to my online financial institution like a vanguard or an e-trade so that it updates other software does that and it's true other software does that right so it increases your balance to the market rate QuickBooks doesn't do that because QuickBooks is an accounting software the accounting software is designed not just to have the balance sheet balance correct at any given time but to record the transactions related to it so you want to record if there was an increase due to income or capital gains then you're supposed to record the income to get and then double check that the balance matches what is on the statement like you do with a bank reconciliation you wouldn't want QuickBooks to tie into your bank and say yeah there's 128 000 in the account and this changed this number to be whatever that is why because then you wouldn't have entered all the transactions using the double entry accounting system which are recording and creating the income statement oftentimes so QuickBooks isn't designed to just make a balance sheet based on what the financial institutions say it's designed to to pull in the transactions possibly to double check all the transactions so that once they are entered you end up with the ending balance now there is other software there's like a personal capital I think has one there I think TurboTax used to be owned by Intuit but someone else owns it I haven't used it since they left Intuit so I don't know much about them at this point but there is other software that they can connect to the financial institutions and just give you a balance at least per financial institution and that's and that's kind of nice so you might actually use both of those tools the software that gives you gives you just like a snapshot of where you are at a balance sheet and then a QuickBooks where you have to adjust from time to time and then record the related income as you make those adjustments and then you could also use some software that tracks more regularly possibly just using the platform themselves each rate or a vanguard or your bank in order to track the day-to-day activities within a particular fund so so that's something to to just be aware of so for QuickBooks you might then update it on a monthly basis and you might go in here and look at your statement and if it went up it's going to go up for multiple reasons it might you might reinvest the dividends and interest and you might and you might have capital gains or it might go down you might have capital losses then the question is should I adjust this account to the current value uh let's say it was just capital gains let's say I'm getting the dividends and interest as income recording them as income and then this amount is changing to the statement due to due to market value fluctuation should I record that market value fluctuation or should I keep this at the at the standard amount uh at cost because you'll note with equipment we usually keep it at cost and the argument for the equipment is the equipment is unique and so how your rare wear and tear on the equipment is is unique it's an estimate but if you're investing in market stocks and bonds they're equivalent to all other stocks and bonds so at least at that point in time you know exactly what the value is so there's actually a good argument then to make the adjustment to market value here where the argument isn't quite as strong to adjust like your equipment to market value because you don't know exactly what the market value is here you do know what the market value is even though the market might be wrong in terms of the long term so so then you could adjust it if you look at the like generally accounting accepting rules for adjusting there's different rules in terms of whether you're going to hold it short term or long term and whatnot i'm not going to get into that in detail i'll just kind of discuss the different ideas you might use if you say okay what if this went up by a thousand then if you're gonna and we'll do this in the adjusting entries your issue is going to be well if it goes up by a thousand what am i gonna do i could i is there a form i can do to record that transaction no because there's no that's not a normal transaction in our accounting process so we might have to just use a journal entry which i would think would be an adjusting journal entry that you might do at the end of the month when you get the statements and you might then increase this if it went up by a thousand where's the other side gonna go in the double entry accounting system there's two options you could create another account inequity that would be the other side which would record the unrealized gains and losses that's not usually the easiest method that kind of confuses things most people will just write it off to the income statement meaning income it's unrealized income so you might call it unrealized income because you haven't yet sold the stock and once again you probably wouldn't put it on the top of the income statement but rather on the bottom of the income statement as other income because it's not part of your normal operations so we'll talk more about that when we get to the adjusting entries also i just also want to point out that if you have your investment here unlike your personal say you're using quickbooks for your personal investments then the question is well how should i break out my investments like if i have investments in a whole bunch of different mutual funds or even stocks should i list out all the stocks in quickbooks and generally the answer is no right because that's too much detail you want to get into all that all that detail in the software like at e-trade or vanguard and quickbook should give you a summary of where you stand at any given point in time so one method you might use is this if you might use big group categories like these are my investments in stocks these are my investments in bonds that's one way you can do it although many people invest in 401k plants that have both stocks and bonds within them so it's difficult to do that another method you might use is that you might invest you might record an item per institution so if you're investing in multiple places like a vanguard an e-trade and your bank or something then you might just say i'm going to create an investment account and then have a sub account per institution and just adjust your overall balance on a per institution basis having all the detail then with the vanguard statements and and possibly with like a personal capital or a quick end kind of report as well to supplement your more detailed investment kind of strategies so that you have an overall investment here so that's another and the other way the other thing you might want to think about is if this was your personal investments the question is is this a short-term investment that you can get into in order to pay off current obligations that are come and do like the mortgage if it was a personal income statement or are they under the umbrella of like an IRA or a 401k plan therefore you might break out your investments between current investments that are you have access to and then put the long term investments those under an umbrella of an IRA or a 401k that you can't access readily down here so that you have some comparison between your current assets that you could use in the event of an emergency or to pay for your upcoming expenses as opposed to those are kind of locked in for the long term and one more thing just to note on the investments that when if you were to record an increase in this investment account and we'll do this with the adjusting entries you could just just have a debit to this account to make this balance 3896 to match whatever on the financial statement or you could create another account possibly a sub account that's unrealized gains and losses for the inventory assets so you can try to break out your unrealized losses in a separate account and that might give you some idea of what you bought the assets for and then and then another account that shows you the gains and losses since the point of purchase that gets a little bit more confusing when you buy and sell stocks a lot because you know you have to allocate out the the allocation between the two but those are just some ideas those are just some concepts with the investments so next time we'll take some of our cash and we'll start buying equipment with it so now let's just open the trial balance to check our numbers so i'm going to go to the tab to the right right click on it and duplicate it and then let's go to the reports on the left hand side close up the hand boogie type in i'm just going to type in trial balance the trusty tb and range change change in the range in 010123 tap 123123 tab run it to refresh it and this is where we stand at this point in time if everything lines up great if they don't line up try extending the date range it's often a date issue if you see that a number has changed when you change the range drill down on the data and then go into the one that has a date that's different and then you can change the date for the practice problem be careful doing that in practice however and if it's still there's still a problem at the end of entering the first month of data input will go into the actual uh transaction details and sometimes that makes it a little bit easier to find some issues at that point