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Opening up the free QuickBooks online test drive by searching in our search engine for QuickBooks online test drive we're going to be looking for the option that has the Intuit.com in the URL into it being the owner of QuickBooks we're then going to choose the United States version of the QuickBooks online test drive verify that we're not a robot and continue. We're currently in the accounting view you can toggle back and forth between the views with the cog drop-down up top your switch from the toggle view to the business view will be toggling back and forth as we go through the practice problem here currently in the accounting view. We're going to open up or duplicate a couple tabs to put our major financial statement reports in this is a process we will do every time one which I would recommend in practice. Right-click in the tab up top to duplicate it I'm going to go to that duplicated tab right-click on it again to duplicate it again then I usually as that one is thinking go to the middle tab and then open up our reports which in the accounting view is down here under the reports and then we can go to the balance sheet report and then as that's thinking I'm going to go to the tab to the right even though it's done thinking right now and we're going to go to the reports again this time the profit and loss otherwise known as the income statement type report I'm going to change the date up top gonna do it in a custom format selecting the beginning date typing in two-digit numbers from 010122 January 1st 2022 010122 and tab I think that's the fastest way to do it to 12 3122 12 3122 tab December 31st 2022 and run it and then go to the tab to the middle same process I'm going to go to the dates and change the range go from 010122 January 1st 2022 tab on the keyboard 12 3122 December 31st 2022 and tab and then I'm going to run that refreshing it so there are our major financial statements balance sheet income statement this is the layout I often work within meaning I enter the actual data on the first tab and then I check my reports balance sheet income statement the impact on them on the second two tabs so now as we think about the accounting process we want to think about and take a step back of the accounting process basically in general obviously the goal of the business is generally going to be revenue generation earning money earning cash so we would like cash flow to be going up typically and in order to do that from the accounting perspective side of things we want to make the facilitation of that cash flow as easy as possible and we want to construct the end result from the reporting side of things which is the balance sheet and the income statement noting that small businesses often are creating those financial statements primarily for reporting purposes oftentimes such as taxes at the end of the year for small businesses and then as the business grows you know that those reports are going to be more and more important just for internal use purposes to design our best decision-making processes to improve the business and then of course larger businesses are going to have more need for the financial statements to be in a specific form for things like shareholders investments in order to get money from banks and that kind of thing so if the overarching goal of any business is revenue generation or as the business view of the QuickBooks accounting software might put it to get paid then our goal as the accounting department or bookkeeping department within the business is generally to facilitate the financial transactions to run as smoothly as possible and also record those financials transactions in order to create the end result reports of the major financial statements balance sheet income statement or profit and loss and the related reports so how do we do that then we can think about this as a process if we think about the setting up of the QuickBooks software to the recording of the transactions to the creation of the financial statements the first thing we need to do of course is set up the accounting system the QuickBooks file now this is often a step that many bookkeepers or people that work in the accounting department don't get to see because you usually start working somewhere where the QuickBooks file has already been set up if you're working in an accounting department and then you're kind of trying to deconstruct what has happened so you can record the financial transactions from that point that you are in going forward but if you understand the foundational stuff then it gives you a lot better understanding of how everything is put together and if you're working as a bookkeeper then of course the creation of the QuickBooks system is often part of the primary job that you're going to be putting together setting up the accounting file the QuickBooks software and then oftentimes if we go to this cog up top it has some of those foundational things so at your company information your account and so on how many users you're going to be setting up the internal controls that you're going to be putting together with different people that are going to be using the accounting system or working within the accounting system and then you have this term lists which is an interesting term and as we're working in QuickBooks we have to keep distinct terminology that's going to be accounting terminology but also there's terminology that's distinct from accounting terminology to the use of the QuickBooks application or software terminology. Now the term lists can be one of those kind of specialty type of terms because the lists used to be the reason that term came about I believe is because in the desktop version there was a drop down and like the drop down menu format that had lists and the most common lists were some of these foundational items the chart of accounts and the item lists or products and services and then even when we go to this online version we still kind of pull in some of that legacy kind of definitional stuff that came in from the QuickBooks desktop version so we have to be able to understand that terminology and we have to understand kind of the difference between what someone might use terminology as if they're an accountant that just are not bookkeepers but they're just accountants like an auditor or something like that and then people that are working within the accounting software that are going to use specific terminology for specific items related to that software such as possibly lists so some of the foundational items in the lists which we'll talk about in more depth later are going to be the chart of accounts which are going to be a fundamental item that we have to put down because those accounts are going to be the basis on which the financial statements are built so we're going to enter transactions if I go to the balance sheet here that are going to be then go into these accounts which are going to have to be listed in the chart of accounts in order to construct so if you go into a business that's already running they're already going to have the chart of accounts if you start a new business then you're going to have to give an idea of what chart of accounts you want and which of those accounts are going to use the other underlying thing are going to be these products and services which is going to be fundamental to making the data input as as easy as possible the data input is going to be done with the use of the forms primarily found in this drop-down broken out by cycle customer vendor and employee cycle so what you want to do is make these forms as easy to populate as possible possibly to the point where you can have like hire someone to implement them without knowing much more than simple data input and the way to do that is we have to make sure that we have these fundamental baseline things in place such as the products and services so we'll talk more about that in in the future and I'm going to go back to the dashboard on the left-hand side so once that kind of foundational stuff is then put into place then we do the normal day to day kind of accounting stuff recording transactions as they take place there's two primary things that we have involved when we record the transactions we want to make the recording of them as easy as possible so I don't want to be dragged down by the difficulty of collecting the cash and paying things out I want those things I want the cash flow to flow financial transactions flowing easily so we can focus as the business on the revenue generation things that we do whatever services or goods that we are providing and then to record those financial transactions to create the end results the financial statements so that we can use those for whatever needs we do internal usage as well as taxes and reporting externally say to the bank or shareholders or whatever for financing so those are typically going to be recorded here and these are broken up by customer vendor employees and note I think it's easy to think about this or nice to think about this in terms of a flow chart which the online version has in the dashboard here but I think this our desktop flow chart has been more static so I often will refer to it also the online version will change from time to time so you want to have a kind of visual of the flows of the forms because the order of the forms is how you would expect the flows to be to be going in your head so you want to be thinking what's going to be the cycle of each of these transactions now we're going to go to each of these cycles and more detail in future presentations but the way we want to think of it from big picture down to little picture is that we're going to say okay we've got a major cycle here which is in essence going to be the outflow of money at the end of the cycle in order to purchase goods and services that we need to facilitate the business now we could do that on a complete cash based system we might make it based primarily on the bank feeds but that's the general cycle or we might have more of an accrual system and then on the customer cycle we want to think at the end of the day from the big picture view we're going to be having money generally coming into the business for goods and services we provide to the customer and then we're going to think about how that cycle is going to work and then of course the employee cycle we're going to have money going out for goods and for services that we're providing for employee for labor and then once we have a visual of the cycle we want to think about the forms that will be included to facilitate the transactions those forms will differ depending on whether we're in a cash based system and accrual based system are we dependent on just the bank feeds or are we entering the data in the system first and even if we're dependent on the bank feeds we still want to think of the bank feeds as a type of form typically increases being deposit forms decreases being a type of check form so then we want to think about these actual data data input forms and as we think about the flow of these forms within the cycle we want to think about how can we create a system so that we can have the cash flowing as fluidly and easily as possible from an accounting or bookkeeping perspective so that we're not spending our time worrying about the flow we're spending our time provided the best goods and services that we can and as we enter these financial transactions these are the financial transactions that are going to be used by QuickBooks to create the financial statements to build the double entry accounting system in other words every time we enter one of these transactions generally two accounts will be impacted or more which will have the double entry accounting system that will be the double entry accounting system that creates the financial statements so we'll talk about each of these forms so what we'll go into each of these cycles and more detail and how they might work and how they'll differ from different businesses and then we'll go into each of these forms and think about transaction by transaction how can we enter the form as easily as possible and how what's the impact on the financial statements now to make these forms what we want to do is make these forms so easy to enter that somebody that knows nothing you know could could enter them we can hire someone that has no idea of the accounting system and just show them data input so they can enter it so you can imagine someone you know at the at the cash register that you just hired you know they don't know anything right but you could teach them how to do the data input because you've got the underlying foundational stuff in there which is the chart of accounts and the products and services so well that they just need to do the data input even though the stuff that the form is doing when they do the data input is quite complex behind the scenes but the data input is quite easy that's the idea so if I look at that cycle with this drop down then you can see that same cycle here right we got the customer cycle invoices if we have to invoice that would be in a cruel system receive payments that's what happens after we invoice then we we have an estimate which would be before the invoice if we had an estimate they don't put that first I think because many businesses don't do estimates it would only be in a specific area like and then a credit memo is a kind of a specialty area if there was a problem with the invoice and we had to reverse it in sales which is going to be a something that was sold at a cash register a sales receipt we'll get into these other ones later but those are the primary ones on the vendor side of things money's gonna go out either with an expense form or check form and expense form is basically just a check form but without a check number a bill if it wasn't a cruel transaction and then pay bills and then you've got purchase orders if there's inventory we'll get into those later and then the employee cycle you've got this the entering of the time and paying the employees and then other deposits are a normal transaction which you would expect to be part of the customer cycle but they put it over here because you might have other deposits like from yourself or the bank a transfer which isn't normal or an everyday transaction that's why it's over here and if none of these forms encapsulate the transaction you're doing then that's when you resort to the journal entry now if you're an accountant you're gonna say hey look all these forms are doing journal entries why don't I just record debits and credits if you've learned like in the if you've learned theory before you learn software that's what you're gonna tend to do I want to do it with a journal entry that's what I've been learning but that's not what you want to do in practice because if you just enter journal entries debits and credits then you're not gonna have that you're not gonna have the connection of all the forms the invoice isn't gonna connect to the receive payment as nicely and if you've worked primary with within bookkeeping software and haven't learned debits and credits as much then you're gonna see these linkages very nicely but you're not gonna understand the journal entries as much or how the financial statements are created so both of those things you know become important over time now so obviously so those are the transactions now you can get into these transactions in different areas but then when you're facilitating the discussions with your customers and vendors then you can go to these cycles on the left-hand side the banking if we've got the bank feeds that we talked about before and then if we go into the sales items so this on the sales that's gonna be like on the revenue side of things so you've got say customer information so we're gonna be tracking who owes us money that would be an uncruel type of thing so this is you know helping us to enter the transactions and facilitate the ease of the transactions so now we're saying if I have a receivable I need to track the invoice and try to collect on the cash again our goal is to make that cash flow process as easy as possible by trying to make it easy for the customer to pay us and trying to follow up with them to make sure that we're getting you know the cash flows is happening so these are like the the centers that you can have to manage especially a cruel transactions the banking with the bank fees and then the customers and leads we talked about the cash flow in a prior presentation so we might try to that would help be more of a managerial thing to look forward into the cash flows on the expense side of things that would be us tracking the vendors who we are paying which would be particularly important if we had bills so that if there was questions from a vendor about a vendor about us paying them then we can go in here and get more detail and then the payroll cycle obviously helping us to sort out all the data that's necessary for payroll if we're doing that internally and then we've got our reports down below which major two balance sheet income statement or profit and loss all these other reports which can be quite overwhelming and we will go through in some detail later are generally just going to be part of expanding upon one or multiple line items on the balance sheet and income statement and then you've got your tax mileage information and your accountant information so these are kind of the centers that you can go into the on the left hand side now if I look at this just to switch the views to the cog up top and I switch to the business view then you've got the same thing we're basically talking about the same stuff here but now we're in the business view so if I go to the I get I get things done page the goal of course is still the same we're trying to generate revenue from the overarching business perspective or get paid as they might say in this view right as what we're trying to do and on the bookkeeping side of things we're trying to make that as easy to facilitate the financial transactions as possible to have the flow of money work as seamlessly as possible to allow us to pay people as easily as possible and then pay as us as easy as possible and to create the financial statement transactions so we still have the plus button up top we still have everything broken out by the vendors we still got the cog which has the lists up top but then you got a little bit different layout you've got the business overview information that's where your reports are so you're typically going to be opening up your balance sheet income statement from there every time and then your bookkeeping that's where your bank transactions are up top and then you've got your chart of accounts within here too so we talked about the chart of accounts you might be able to get it from the cog here or you go to the side there's multiple ways I'm going to say see chart of accounts that you can get into different things within QuickBooks and you want to know multiple ways to get into things for multiple reasons because it kind of helps your mind think about things from different angles but also if you talk to other people they're going to do things differently and you got to say okay I see what you're doing it's going to be a little bit overwhelming when there's so many ways to do one thing but you know the fact that we have these two completely different views is is kind of mind boggling the number of options that start to grow from all that but and in any case and then in here this is where you get paid so these are going to be basically your your cycles that you would be managing for your your revenue cycle and and your your expense cycle so the money that's coming in and the money that's going out which would be more and more important if you're on an accrual basis managing receivables and payables and then you've got your commerce information down here seamlessly connect your sales channels we might go in that's the kind of a specialty here we might talk about that later and then your payroll of course a payroll center to manage that and then you've got your taxes and your other kind of apps on down below so that's going to be the the general format we when you first start the business you're going to sit down the foundational stuff start the company file make your chart of accounts make your products and whatnot once the business is running smoothly then most of your data input can be found just right in this button these are the day to day forms for the day to day data input which should be as seamless as possible if you did the foundational stuff correctly and then we can manage the flow of these forms in particular the accrual components invoices which deal with accounts receivable people own this money and bills which deal with accounts payable we own them money by going to the centers when we go into these centers customers and vendors open invoices and open bills we can manage and talk to customers and vendors and discuss any payment problems on either side of the table from there