 In this presentation, we will enter some typical type of expenses, including things such as the phone expense and the utilities expense. We're going to do this in a two-step process, first entering the expense as we normally would for a for-profit type of organization, and then at a later time, we will allocate and break them out in accordance with the classes that we have set up. Let's get into it with Intuit's QuickBooks Online. Here we are in our not-for-profit company, not-for-profit organization dashboard. We're going to go on to Excel to think of our objective. We're now on Tab 8, so we are on Tab 8. We're going to enter some of the normal kind of business transactions, normal type of expenses you might consider in either a for-profit or not-for-profit type of organization. So we've got the telephone expense, and so if we're going to be paying something like the telephone bill, we're going to have a typical kind of setup for this. We're going to be writing checks. Therefore, cash is going to be decreasing, credit to cash, debit to the telephone, and so if we had obviously this one, the effect on the accounts then would be a debit to the telephone expense and a credit to the cash. Now note the difficult thing about these transactions is that we also are going to have to record these and break them out by category. So note down below where we have our statement of activities on the expense side of things. We're going to be breaking them out with restrictions and without restrictions and so on, and this breakout, which we will do by classes, and then we'll further be breaking out the items that are without restrictions into what they are used for, breaking them out by function. So note when we enter this into QuickBooks, we will typically see the items as their nature, their nature being like the rent expense, the salaries expense, that's what they actually are in essence, that's their nature, and then by function what they're used for, programs and other admin type functions, including the program of education, community service, and then the admin function and the fundraising. So what we need to do is then enter this information like we normally would, assign them to the proper account, use the classes to then assign them out as what we'll start off with unclassified, then we'll use the classes, then we'll go back in there and assign the classes to these items so that we can then break out the more detail for the classes. So we'll use the class feature within QuickBooks to do this. We're going to do this in essence in a two step process. And I think this is how you would want to do it in practice because it's just going to be a little bit faster if you have to do this two step process. One, I'm just going to enter it in there and I'm not going to assign a class. And I'll just enter everything in there so that when you do the data input, you can assign someone just to, hey, just do the data input. Don't worry about the classes. It will then populate into unclassified and then go in there at the end of a period of month or week and then assign the classes going from the income statement by class back to the information to assign the classes. We're going to do the first of those steps now, which will be similar to just a for-profit organization just entering the expenses. So telephone expense, we're writing a check, telephone expense. Postage, same thing, cash is going down. We're going to put the other side to postage expense, just what you would expect them to go to in account format by nature. Then we'll think about by function later by program and so on and so forth. And then cash and the utilities, supplies, cash goes down. And then we bought supplies on account, which means this time accounts payables going to be going up instead of cash going down. And that's going to be it. All right, so let's do it. Let's start with the telephone first. I'm going to highlight them green as we go. So the last green one, that's the one that we're going to be working on. We'll start off with the telephone, with the telephone. Then let's go on back over to QuickBooks. Going to hit the plus button. Now if we're paying this by check, obviously we would write a check. If it's some kind of electronic transfer that we're just entering into the system, we could simply go to the expense here. Also note, if you're entering into the system, you might use like a bank register. You could use the register as well to quickly enter them into the system as well. I'm going to use the expense form. So let's open up the expense form. We're going to say that Verizon is our telephone company. So I'm going to type in the vendor was going to be Verizon, Verizon. It's going to be coming out of our checking account. So make sure that you got this drop down going, whoop. I didn't add it. V-E-R-I-Z-O-N, Verizon. Is that how you spell Verizon? No, that's not how you spell Verizon. It's supposed to be V-E-R-I-Z-O-N, I think. So there it is. And then I'm going to say save. And then I'm going to select the drop down. And this is going to go to the checking account. So we'll pick up the old checking account here. I'm just going to tab through and the date then let's make this 0-1-3-0-2-0. So it's towards the end of the month here. It's going to be an electronic transfer, we're going to say. So I'm just going to use cash, the payment type or possibly how we should leave that blank. Since it's cash. And then I'm going to go down and we're going to be entering then the telephone. Let's see if they have one for us. Do they have anything like a telephone expense? I don't think they give us a telephone expense, which is a little unusual to me. They do have the utilities. This is where we'd have to think, do we want to group it in utilities or break out the telephone? Typically, I think most companies break out the telephone out from the utilities. So that's what I'll do. But that's the method that you want to think about with these expenses. First, the expense categories that they gave us. Can we find one that's appropriate there? If we can, then we probably should use it. If the name is slightly different, then we can adjust the name in the chart of accounts. It's probably the best method. And then if they don't give us the account we want, then and only then, after we've kind of considered the options should be add an account. Otherwise things get messy real fast if we add, if we just keep on adding accounts. And also, obviously, if you're doing the second month of operations, you should always be checking the prior month to see what happened there, to first consider consistency. So you want to be consistent as much as possible. If you make a change, then make sure that you are doing it for a reason and then implement that change from that point on forward. All right. So then I'm going to say other, I'm just going to say other business expense here, because this is really the key point that we need on the name. And I'm just going to call it telephone, telephone. There we have it. And then I'm going to say save. And that looks good. And the amount, let's pick up the amount is for 6,200. So we'll pick up the amount 6,200. And then we don't, I'm not going to put a billable, not customer. And I'm not going to have it as a class because I'm going to leave it to go into unclassified. And then we're going to go back in and classify it at a later time. So what's going to happen here? Expense means the cash account is going to go down. This is actually going down from the checking account. So the checking account is decreasing, of course, other side then going into the income statement profit and loss. It's going to go into the account of the telephone expense. And it's not going to be classified, therefore going into a default category of unclassified, which we will then go into at a later point, later presentation at the end of the month, one by one and reclassify that entire column at one time. All right, let's say save and new. We're going to do this a few times. So I'm going to say save and new. I'm going to say yet. Thank you for letting me know about that. QuickBooks, but that's okay. And then we're going to go into the next one. So I'm going to go into the next one, which is going to say, okay, now we're paying for printing and postage, printing and postage. I'm going to make this green to indicate that's the one we are on, to lessen the likelihood that I'll pick the wrong number or something like that. But I could still do it. But I really think the colors are helpful. They make it, they reduce the, reduce it. So I'm going to go back over here and then we're going to say, this is going to go to, let's say staples, staples. That's a supply store staples. I think that's spelled right. It's going to be a vendor. I'm just going to set it up quick setup here. It's going to come out of the checking account. Once again, we're going to keep it at the date at the end of the month. I'm not going to put a payment type this time because we're going to say it's an electronic transfer. And then I'm going to say it needs to be going to printing and postage. I'd like to go to printing and postage. And let's see if we have an account over here that's like something that like office supplies, it can go there. So I could put it in the office supplies if it's postage. You know, I might want to put it in there. It might be too small for me to break out. Maybe I don't want to break out the postage. But I kind of like to track my postage in separate account. And this is kind of the how I would mold things over if you were thinking this out. You know, do I want to, you know, do I want to put it in there? Is it worth it for me to put it into another account? I think it is here. So I'm going to have, I'm going to have another account for this one. I'm going to say that's mad another one. And this one's going to be an expense and I'll have the other detail, which I'll just say is like other for here because I don't think that account, it doesn't do much of anything. So I'm just going to then say this is going to be printing and postage, printing and postage. Then I'm going to say save and close. And the amount, the amount is going to be for 12,900. One, two, nine, zero, zero. And then I'm not going to have any class. And what's this going to do again? Of course, it's going to be decrease in the check and account. The other side going into an expense account that being printing and postage is not going to be assigned to a class. Therefore, when we run the profit and loss by class, it's going to be an unclassified account, which we will then classify according to our percentages all at the same time at a later time, later presentation. All right, let's do it again. Save and new. And thank you QuickBooks for reminding me about that, but we have thought about that. And now we're going to go then to the utilities. Utilities. All right, that's the next one. I'm going to say this is our electric company. We pay Edison. It's our electric company. So I'm going to call this Edison, Edison, and add that vendor. Now, obviously, if it was the second month of operations, sometimes the accounts would populate for us and it would be easier for us to enter this information. And it'll make it easier for us also to be consistent through the fact that when we have the same vendor, that information will populate on the second month. So just keep that in mind. It'll help you with the consistency. So we have the checking account, January 30th, and we're just going to scroll on down here. Now, this one is the one, like the electric, that's what I put into utilities here. So I'm going to put that into utilities. I'm basically, utilities for me most of the time would be the gas and the electric. Gas and the electric on the utilities. So I'm going to go utilities. That's the one we want. And then the amount, the amount here, let's check out what is the amount. 9,100. So 9100, missing a zero, 9100. All right, what's this going to do? It's going to be decreasing the checking account. The other side is going to go to an expense account on the income statement or profit and loss. That being the utilities expense, it's not going to go into any class. And therefore in the profit and loss by class, it's going to be in an unclassified area that will then classify all at the same time at a later point in accordance with our percentage breakout. All right, let's do it again. Save and new, save and new. Thank you QuickBooks for the reminder, but it's okay. And we're going to go back on over here and do this again. So now we're on the supplies expense. So now we have supplies expense. I'm going to make that green. So I'm going to go back over. We're going to say supplies. And I'm going to say this came from office depot. So I'm going to say office depot. And it's going to be from the checking account and same date. Now I wanted to use office depot because this is going to highlight kind of a problem that you just, you need to be aware of. Last time we used office depot, we put it to the account of property, plant and equipment. And so that's what it's trying to help us out. And that's great because it helps us out with consistency and say, Hey, last time you put it to here with the 13,000, do you want to do that again? That helps with consistency. However, this is an exception when we do not want to do that because last time we put it to equipment because we purchased a large amount from office depot. And this time we purchased a smaller amount which we just want to put into office supplies. So note that especially in the second month of operation, this would have happened with most of our transactions and most of the time it would have been very helpful. But you can't completely rely on it. Otherwise you'll use some funny things will happen such as this. So I'm going to hit the drop down and say, Okay, that's not where we wanted to go. I want an expense account. So we're going to look for an expense account. See this, I think we saw that office supplies before. Here we go. Yeah, office supplies and software. It's going to office supplies and software. And we'll pick up the amount is not 13,000. It's 500. So 500 for that. What's this going to do? Decrease the check and account. The other side going into the expense account for the office supplies. It's not going to be classified into class. It's going to be an unclassified. We will class it all later in a later presentation. Let's say save a new and say, Okay, thank you. Quick books for the reminder. And then go back on over here and say that one is done. Now this one's a little bit different because this one's going into accounts payable. So it's going to be supplies again. But the other side, it's a bill. So this is the bill because it's not coming out of the checking account. So I'm going to go back on over and I'm going to close up the check here. We don't need or the expense. We don't need an expense. We need a bill type of form. So I'm going to hit the plus button. Now we're going to go to a bill form. Now whenever you see a bill type of form, it means accounts payable is going to go up. That's what a bill means. So we're going to take it. It's going to go like we can imagine. We're going to say this is going to office depot. We get to imagine office depot billing us, sending us an invoice or bill. And we are now going to take that and put it into our system, not pay it yet. We're just putting it into our system, increasing the accounts payable. So we'll put that in. We're going to say terms. I could say, all right, terms. I'll say net 15. We're going to say the bill date is 130. And there we have that. And then we're going to pick up the category. And so now I'm going to categorize the supplies. Now you might say, hey, look, you're using office depot. Again, why didn't it add the category of supplies? And sometimes it doesn't when you jump over from like an expense item to a bill type of item. So if we had entered a bill in the past for office depot, then it would most likely populate here. Last time we did the expense form. So I'm going to hit the dropdown. We want to populate the category to be office supplies or that supplies item we had again. So let's see, office supplies, that's the one. And we're going to pick up the amount. So we're going to go back on over to here. We're going to say 4500, 4500, no class account again. So this is going to be the same thing. What's going to happen? Well, it's going to be increasing because it's a bill. The accounts payable, a liability account. Then the other side is still going to go to an expense, increasing the expense, decreasing the net income. And it's not going to be going to a class. And therefore it's going to be an unclassified when we run the report by class. And we will then classify them at a later point. So let's say save and close. And I think that's it. So I'm going to say save and close. Thank you for reminding me of that QuickBooks. I'm assuming that's the same message. I hope it is. So I'm not messing anything up. QuickBooks is like, hey, I'm trying to tell you this. Okay. So we're going to go back on over here and say, let's go to the reports. Let's check off our reports or check out our reports. We're going to go into the balance sheet. Let's open up the old balance sheet here and scroll up top. Make sure we're in January or January is included. I'll go all the way to the out to the end of the year, January through December, run the report. Then I'm going to go back up top. I'm going to duplicate the tab by right clicking on that tab and duplicating it. Then I'm going to go back to the tab to the left. Let's do the same thing for the income statement. We're going to go down to the reports on the left-hand side. Open up the income statement, the PNL, the profit and loss right here. And see what that looks like. Let's scroll back up top. Make sure our dates are sound. January. Let's make it through December 12, 31, 2, 0. Run that report. All right. Now let's go back to the balance sheet. Let's close up the old hamburger and then hold down control, scroll up a little bit, get back up to that 125, 125%. And then in the checking account, it's negative because again, we still haven't deposited this undeposited funds, which I should really do, but in any case, we're going to keep it here. We're in the negative number, but we're not going out of business here. It's just we haven't recorded that last thing. It's okay. The not-for-profit is still flowing forward, even though it's a not-profit with no-profit things. Okay. So we have the items here. There's Staples, Verizon, Office Depot, Edison, and so on and so forth. Here are our items. Everything has been included, I believe looks correct, except for of course the one that went to the bill, as opposed to the expense forms. If we go into any of these forms, we'll actually go into that expense form. If you needed to make any changes at that point in time, it is possible to edit the form once you go back into it. So let's go back up top, close this back out, and then go back to our balance sheet, back to the balance sheet. And then the other one that we entered with a bill is going to affect the accounts payable. Here's the accounts payable form. Let's open up the old accounts payable form. There's the bill. So anytime you see a bill type of format, it will be increased in the accounts payable. Bill means increase to accounts payable. The bill and the expense and check forms look very similar, but that's the major differences. Bills and checks or checks and expenses will be decreasing the cash account. Bills will be increasing the liability account. All right, let's go back on over to the balance sheet. Now let's go to the income statement and close up the hamburger on this side, going down to the expense items. So here are the expenses. Now note here, they're listed out by nature. We call it nature versus function. In other words, what they're used for versus kind of what they are. So these are basically, this was a software type expense. That's the typical way you see it broken out. When we think of the not-for-profit organization, we want to think about it in both ways. Note that we're going to have in our format here, we have this statement of activities broken out between restricted and not restricted. So we'll think about that by class. We'll use our classes to think about that in QuickBooks. And then we have them broken out by what they're used for here. So notice when you're giving this to the board of directors, you've got to think, well, what would be easiest for them to see? I need both. I need for them to see it by form and by function for reporting purposes to get everything in there for regulatory reporting purposes oftentimes, which means I need something like this, having it by nature here and then by form. But if you give this to someone straight off the bat and you're talking about a bunch of people trying to make decisions and they're not all financially savvy, even if they are, this gets quite confusing. This gets a little bit overwhelming. So you really want to start off with something different and then give more detail because this will bog things down. So we need to, in essence, break out by nature and by form in some way with our reporting. So let's go back on over. You can see here they're by nature, which is usually what most people consider to be thought of in, but it can be useful with decision-making to then think about, well, how are we allocating that out to the function? What is it what we actually do, the programs and the administrative functions? Because when you're looking at a not-for-profit organization, just realize that one of the things people are really concerned with is if you're taking this money, how much of it is going to the programs versus management in general, which is really going to the workers, because that shows how efficient the program is. So you really want to think of, well, how much of this funding is actually going to what I'm trying to donate for or what we want to actually do, the purpose of the program and not to the administrative or you want an efficient amount going to the administrative. So if I go back on over here, we have that. Now, if I go into any of these items, that will, of course, take us back to the checks or expenses that we have written. So let's go back up top. Now, what if we want to break this out by class? If I select the drop, I drop down and break this out to by classes, and that will help us to see the function. So we saw it by nature. Now, this will help us out to see it to by function. However, note that we didn't assign classes yet, you'll recall. That's why I kept on giving us those messages every time we entered it. It's an unspecified. So we have them all in unspecified over here. That made the data input a little bit easier because I didn't have to break out all these percentages to go in by class. But we're going to need to basically allocate these to what they're used for in accordance with some kind of allocation base that we'd have to determine within the not-for-profit organization. Our determination was this is going to be our percentage breakout. 40% education, 20% community service, the admin or management in general 20, and then the fundraising 20. So we're going to have to go back in here, then, and allocate this out by class, which it's a little time consuming to do, but again, I think it's easier to do. It's not too bad. We're going to click on each of these, drill back in on them, and then break them out by class. So we'll do that in a future presentation, but I think it's a little bit easier to do the data input when you're just paying the bills, just pay the bills. And don't worry about the class. And then you can run this report and easily see these items that have not been specified, have not been put into the proper classification, and then simply go back in and reclassify them as we will do in a future presentation. So that will obviously be a good time, and we'll do that later. So that's going to be it for now. Let's get out of here.