 0. Accounting Software. Bank feeds? Get ready to be an Office Hero with 0. 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. Here we are in our personal zero home page. We set up in a prior presentation. I'm currently zoomed in by holding control and zooming in on the scroll wheel to 175%. I'm going to go down and open the demo file you can do here or by going to the drop down and the demo file, I will click on the demo file. I'm going to open up the major two financial statement reports that being the balance sheet and the income statement. I want to open them up in their own tab and practice doing that every time. So we gear our mind towards the end product, the end result, the financial statements to do that. I'm going to right click on the tab up top, duplicate the tab. So I've got two tabs with zero in it. I'm going to go to the accounting drop down and open up the reports. And then the first report I want is that balance sheet report opening up the balance sheet report. This is where we stand as of a point in time. And then I'm going to do it again, right clicking the tab up top, duplicating the tab and then opening up another report in the accounting drop down reports. This time the income statement or profit and loss report. These are the major two reports. All other reports pretty much are going to give some more support to one line item or multiple line items on this report or these two reports. I'm going to put this to January to December to December of 2021 here. And so and I'm going to update and refresh that. So we're going to do that basically every time going back to the first tab. So this is my major structure. Normally, I have the balance sheet, the income statement open, and then I'm going to be working on the first tab and toggling between them as we enter the data. Now we want to think about the bank feeds. Note that we're going to do a practice problem without having the bank feeds at first. And then we're going to add the bank feeds at a later time. Although as we talk about the accounting system, we will be touching on the effects of the bank feeds and the pros and cons when we go through our practice problem. The reason we want to do that is because in your accounting system, you really want to have an idea of the flow of your accounting system before you set up the bank feeds, because depending on your needs in your company, the bank feeds will be used in different ways. So we're going to have a whole section. Hopefully we plan on having a whole section or a whole course on the bank feeds. But first, we're going to think about the accounting cycle, the accounting process, the forms that are used in order to make the financial transactions, and those being used to make the financial statements, and then where do the bank feeds fit within it. To understand that a little bit better, well, first, let's just take a look at the bank feeds in general. You can go to the accounting dropdown and the bank accounts. Note they have their own kind of section here, because in other words, you would think they might be just simply in the chart of accounts. But the bank accounts are particularly special types of accounts because you can connect them to the bank feeds. So you can connect or set up a new banking type of account, have the option to connect to the bank feeds within it, which we'll talk about in future presentations. And then within that particular account, as you pull in the data from the bank, which is the same data that you'd see on your online banking system, increases and decreases to the checking account, or the kind of data that you would see on your bank statements, increases and decreases to the checking account, they'll be pulled into the system. But they're going to be over here if I go into the reconcile items, you could see the items that have been pulled in, and they've got this tab called reconcile. And this, I would call this kind of like bank feed limbo, meaning the data has been pulled in from the banks, but they're only increases and decreases to the checking account, the date, and it might have a memo if they're electronic transfers. What we still need in order to map this to the end result of the balance sheet and the income statement is going to be an account to assign it to, and possibly a vendor if it's going to be a payment that who we paid, and then a customer if it's going to be a receipt of money, we're going to want to add that information before we can pull it from the bank feed limbo, I would call it, into being used to create or verify the end result, the financial statements, the balance sheet, and the income statement. So if you don't know how that process is going to work, because you don't know the accounting system, then you're going to end up pulling in a bunch of information into what I would call bank feed limbo. And this is going to look quite kind of confusing as we pull it in from here to actually being useful to make the financial statements with it. So the reconciling process is going to kind of help us with that, with that also it's called reconciling or the tab says reconciling, because we can take the bank data and either match it to what we put into the system, or we can use the bank data to record transactions, which will help us reconcile in the bank reconciliation, which we'll talk about in future presentations. Now, let's go to the flow chart. This is the flow chart on QuickBooks desktop, but I'm just looking at the forms. So once you understand the flow, then you don't really need a chart like this, but I think it's a good visual to start off with to understand what you need to know before you basically put the bank feeds in place. So for example, if you're in a system where you're where you're reliant on the bank itself to record the transactions, that's the easiest kind of system to put the bank feeds in place in. And you can think of this in terms of cycle. This is the outflow of cash at the end of the day or the vendor cycle who you're paying for goods and services. This is the receivables or cash coming in the customer cycle, the most confusing cycles usually the customer cycle or can be. So let's take a look at that one. Let's say you're getting your revenue from like gig work, you do YouTube channel or something like that and you get paid for YouTube and they just send you money, you don't have to invoice them, you don't have to do anything, they just give you money. That's the easiest system to use, because then it's going to come through the bank feeds and you can use the bank feed to in essence record a deposit form at that time at point in time. Generally, the form is what the system zero is going to use in order to record it generally, right increases to the checking account are usually a deposit type of transactions. So and then the other side is going to go to revenue. So if you have a system like that, then it's fairly easy to use the bank feeds and build your whole accounting system based on the bank feeds. But you're not using the forms designed in an accounting system to record revenue that way, which are the sales receipts for a cashed based system and invoices for an accruals based system. So you'll lose a little bit of detail, you might not have as many subsidiary reports breaking out the sales by customer and by what you sold service items and inventory. So if you have a cash register kind of situation, for example, then you would think that you would want to have to record the sale in your system at kind of like the cash register at that point in time, and then have an internal control of checking the transactions you put into the system versus counting the cash, and then make the deposit and deposit into the bank in the same grouping as as you expect to be going into the bank. So what will be on the bank statement and the bank feeds, and that kind of system, then it's a little bit more complex to deal with the bank feeds, because you're probably going to you're not going to be able to wait till something clears the bank to record it, but instead you're probably going to record the sales receipt and the deposit. And then you're going to check you're going to use the bank receipts, bank feeds to reconcile, which is one reason they call it here a reconciliation process in a full service accounting system. You would enter the transactions first, and then you reconcile it and the bank feeds can help you with that bank reconciliation process. But if you have a very like a simple company structure like gig work, you can use the bank feeds to actually build the financial statements instead of using it as simply a reconciliation item, you can use it to record you know the transactions. And then if you're on an accrual based system, that's where you have to do the work first invoice the client billing the client in essence, track the accounts receivable until they pay you this would be something like often bookkeeping, the landscaping and stuff like that. And then once you get the money, then you're going to make the deposit. Once again, this makes it a little bit more difficult to just construct your financial statements from the bank feeds, because you're going to have to track an accrual component of accounts receivable. So you want to say, okay, well how are the bank feeds going to fit into that kind of system before you just, you know, add a bunch of stuff from the bank feeds. And then on on the vendor side, if you're just paying and this often is the case with small businesses, if you're just paying with electronic transfers, for example, and they come through the bank, that's the easiest system to just construct your your books on the paying side from the bank feeds credit cards as well, because they're electronic transfers and can generally have bank feeds related to them to and you could just build your books from the bank feeds. But if you're writing checks, that becomes a little bit more difficult because now you've got a physical check that's going to be outstanding. And you're going to want to track that outstanding item. So you're going to want to enter the check first, and then verify to the bank feeds. And if you're entering bills, typically for larger companies, then you know, as you get bigger, you're going to be managing your cash flow a lot more carefully in terms of trying to pay as late as possible. And so then you're going to have the accounts payable, which is an accrual component. So how do the bank feeds fit into that. And then of course, if you have inventory, that messes up the bank feeds as well, because inventory typically results in an accrual component. So you got to track the inventory when you buy it. And then you're going to have to pay the inventory when when you sell it, or you're going to have to expense it when you sell it. So inventory throws a wrench into bank feeds, you need to understand it before you set up the process. And of course, payroll is another confusing component. Are you going to do payroll within the system? Are you going to get a third party payroll, or get purchase the payroll in essence through the zero? And if you do it through zero, then, then you can't just wait till of course the payroll check clears the bank generally, because you're going to have to deal with whatever payroll needs, which might include withholdings and whatnot with payroll. So we just want to touch on that now and just show you some of the complexities with the bank feeds. If you don't understand the accounting system, then it's going to be difficult then it's going to be difficult to add the bank feeds properly unless you have a very simple accounting system, like you're just getting paid from YouTube or something like that, and you just want to use the bank feeds themselves to record your transactions. If you're entering other forms, accrual forms, like an invoice, billing clients, like a bill, tracking the accounts payable, then or dealing with inventory, those are usually going to make the whole bank feed things a little bit more complex. And you have to consider that first. But we'll dive into that in a lot more detail when we get into the bank feeds and hopefully try to we'll build our financial statements from bank feeds. And then we'll kind of talk about those more complex issues at that point in time. If you want to jump to that area, you can you can do so. But if you have no accounting background, you might want to at least go through the first part of the course, where we talk about the general accounting process. And then in the second part of the course, we'll enter financial transactions without bank feeds. And then we'll get into the bank feeds.