 QuickBooks Desktop 2023. Bank feeds? Let's do it. Within to its QuickBooks Desktop 2023. 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 than 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. In prior presentations we downloaded and installed the QuickBooks desktop software indicated by this icon here comparing it in our analogy to the Microsoft Word software. This would be similar to the Microsoft Word software. We then downloaded the sample file the data file which is here similar or comparison to in our analogy a Microsoft Word document. We're now going to be opening up the program and then opening up the data file within it will do that typically by double clicking on the software itself. If it does not open to the last data file we had open that will usually be the first option up top you can see the location of it down below mapping it on where it is on the computer. Remember you want to know where that is even though it's easiest to just open it from right here by just say opening that file. We'll do our general setup process that I do basically every time I'm going to close this out here's our homepage if that homepage doesn't open and you want to open it you can go to the company drop down homepage right here. Then we have this into our display window I want to maximize it to the gray area typically I will do that by maximizing this window into our display area. Then I want to see the open windows so I can toggle between any open windows I could do that by hitting the open windows here but usually I go to the view drop down and open windows. Now we have our toggling screen then I'll open up my major two reports that being the financial statement reports balance sheet and income statement. So I'm going to go to the reports drop down company and financial open up the profit and loss otherwise no one as the income statement I'll change the date range up top. The fastest way to do that is usually just to type it in there I believe by going from 010124 we're working in the future as compared to when I'm recording here to 123124. And so there we have it and then I'm going to open up the balance sheet you can see I have two things open on the left hand side by going to the reports drop down company and financial going down to the balance sheet standard. Changing the date to 123124 and tab. So that's what I'll typically do every time we open up the software. I'm going to toggle back on over to the home page. In future presentations we're going to go through each of these cycles vendors customers employees in detail looking at each of these forms and how the forms were then used to enter the data that were used to construct the financial statements that being the balance sheet. The income statement or profit and loss or in other words we'll look at the balance sheet and income statement or profit and loss that has been created deconstructed and see how it was put together with the use of the data input forms. The data input forms then being used to enter the double entry transactions in a double entry system in essence the journal entries. Now as we go forward you might be saying hey shouldn't the next step be that we connect to the bank and we use the bank feeds to do the data input and create the balance sheet and the income statement. You can do that and we will have a whole section simply on the bank feeds. However I highly recommend first getting some idea of the data input forms because if you just go right to the bank feeds and you try to just connect to the bank. What will happen oftentimes is people get overwhelmed because they download a bunch of information from the bank and it doesn't actually go all the way through into the balance sheet and the income statement. You still need to do some work to get everything set up and to do that work you still need to understand what the forms are because even when using the bank feeds. It's going to be using these forms and depending on the type of business you are in sometimes the bank feeds are a lot easier to use you can use a lot easier of a system and sometimes you have to account for the fact that you have a bit more complication in place that you need to understand and the only way to understand that is to really understand the cycles that we're looking at and how these forms are going to be impacting the financial statements. So that's kind of why we're doing the process that we are doing but again if you wanted to try to jump to the bank feeds themselves and go right to connecting to the bank you can do so just kind of be careful beware. So let me give a little bit more detail on this in our sample file you could look at the bank feed section by going to the banking drop down we go into the bank feeds and let's look at the bank feeds center here. So the bank feed center already has some bank feeds that have been set up I'm going to close this window on the left hand side with the carrot. So these are the bank accounts that we have basically put together at this point I'm going to maximize the screen to the gray area. And so if I go here for example on the second one you can see there's seven transactions are waiting to be added meaning they've connected to the bank the bank feeds have flowing through to our system. We now need to add those transactions to the system. Now the thing that gets people messed up when they first start the bank feeds if I look at these transactions these are the three these are the few transactions that have been put into the system but they have not yet been added to the financial statements. In other words they're not being used to construct the balance sheet and the income statement. We still need to add some data to the system before they're going to be going into the balance sheet and the income statement constructing our financial statements. So a lot of times when people start out they connect to the bank and they download a whole year's worth of data and then they end up with all this stuff which I call is in now bank feed limbo. That's what I call it because it's in your QuickBooks file but it hasn't been used to actually be part of your bookkeeping to construct the end result of the balance sheet and the income statement. And then they don't really know what to do or possibly we start entering the actual transactions not quite correctly because we don't understand how the forms work and that kind of stuff. So usually oftentimes the name of QuickBooks and even the advertising of QuickBooks is kind of geared towards the idea that you could just set up QuickBooks set up the bank feeds and everything will just work from there. But it's not usually that easy and it could be more or less easy depending on the type of company that you are in so just be aware of that. Let me give you a little bit more detail on when it might be more or less easy to just try to construct your financial statement from the bank feeds. So I'm going to open this back up with the carrot. I'm going to go into the home page again and let's just think about different kind of companies. I'm going to close the carrot up top and I'll try to think about the easiest company. It would be to just use bank feeds and then add some more complexity when it might be more difficult to use the bank feeds or you need to have a better understanding before you could just enter the data into the bank feeds. So the bank feeds would be easiest to use if you have a system where you're not using inventory, it's a service based business and possibly when you are getting paid you're just entering that directly into the system as revenue. Meaning you don't need to collect through accounts receivable. You don't need to have an accounts payable. This would basically be a cash based system. But it would even be a step easier than a normal full service cash based bookkeeping system because we could set up the system so that we are completely dependent on the bank data to create the financial transactions rather than using the bank data as kind of a double check of the data that we entered into the system, which could work well for certain types of businesses possibly like gig work. So to imagine that you can imagine the two kinds of transactions that go into the bank account. Either there's an increase deposit of some kind or a decrease which we would typically categorize it as an expense of some kind. If you have a separate bank account from say your personal account it's a business account and we were able to categorize everything that's an increase as income and everything that's going to be a decrease as an expense. And we don't need really a whole lot more detail such as the customers and vendor more detail kind of information. We don't need a cruel accounts like accounts receivable or accounts payable. Those would be the easiest type of businesses to try to be just completely reliant on the bank data and use the bank feeds and be able to get things set up to be automated fairly easily. So again that might be something like gig work if you're getting paid through like a YouTube or some other platform whenever you get the money whenever you get the money is just going to be an increase and you're going to record that as income on the income side of things. Then that will be a pretty easy transaction for the bank feeds to basically enter into the system. But note it's still not a full service bookkeeping kind of system in that usually you would still be entering the data into the system on your end. Even if it was a cash based system entering the data on your end and then you would usually check it to the bank to double check and then reconcile to a bank reconciliation to compare your books to the bank's books. If you're making your books directly from the bank data then you don't have that kind of comparison the bank reconciliation while still necessary still something you should do isn't giving you as much of a double check because now you do not have two separate entities doing the bookkeeping. You're self and the bank that you're comparing to get an outside check you just have one entity doing the bookkeeping or entering the transaction the bank and you're just copying you know the bank transactions or being dependent on the bank transaction. So it's a little it's a little bit different. Also note that if you enter transactions that are deposits on the on the revenue side of things if you enter a deposit. As as something that's going to go to income that's not what QuickBooks is usually designed to do because usually it's designed to create an invoice and then a receive payment or create a sales receipt and then record the deposit. So you'll lose a little bit of information because when you create these sales documents which are usually the tools used to increased revenue. These will give you a little bit more detail in terms of the customer who gave you the money so that you could sort by customer. But again you might not need that detail you might just say I'm just going to deposit it in here and I'm just going to call it an income account and I might have a little bit more detail in the bank feeds because the bank feeds if they're electronic data transfers. Give us a little bit more detail usually about who they came from so I can at least I can at least record it that way even though it's being recorded with a with a deposit form and not using the the sales receipts forms. If you're getting deposits that are not coming through an electronic transfer like you're getting cash money and and you wait for it to clear the bank then the bank feeds not going to have much data for you right it's just going to say hey there's a deposit. So you might not know who it came from or anything like that. But again if it's just revenue and all you want to record is the fact that it's an increase then you would you could use the bank feeds even though you might not have as much detail in in the records by doing that. Now of course if you have an accrual system which an accrual system is going to be necessary not just because like you could pick one or the other I want to be at a cash based system because it's easier. No it's the type of industry you're in. So if you do like bookkeeping or something like that then usually you have to do the work first and invoice somebody. So if you invoice somebody here now you're billing them for work that has been done but you have not yet received the money. So usually within QuickBooks it'll track that accounts receivable so that you can send out another invoice and so on. But notice that that will complicate your bank feeds because when I enter an invoice there's no cash affected. Accounts receivable is affected as we'll talk about in the future and revenue is affected. No cash is affected so when you when you deal with the bank feeds and you have to track accounts receivable you got to think well how am I going to fit in the bank feeds to the fact that I'm tracking accounts receivable. I can't just rely on it clearing the bank because I have to track the fact that people owe me money through accounts receivable so that a cruel concept will complicate the bank feeds a bit. Same thing on the expense side of things if you're all of your expenses are electronic in nature meaning you use electronic transfers instead of paying people with cash for example. Then it'll be easier to to see that data in the bank feeds and assign it to the proper expense accounts so that can be a fairly easy easy process more in a cash basis to automate over time. But if you're in a situation where you have to track the accounts payable that you owe so if you're tracking the accounts payable that you owe and then you pay them at a later point in time you have a similar a cruel problem. Just note that most small businesses usually have this issue with the receivables more than the payables oftentimes meaning you might be in a situation where you have to track the accounts receivable and you're more on a cruel on a cruel basis here. Whereas on the vendor side of things maybe you can be more on a cash basis on on the vendors side of things so so when we think about this cash and a cruel concept it kind of depends on the industry that you are in and what your particular needs are. The other thing that really complicates the bank feeds is if you're tracking inventory. So if you're tracking inventory then you got to think do I want to track inventory within the QuickBooks system on a perpetual inventory system or do I want to track inventory say outside of the QuickBooks system. And again because there's an accrual component typically to inventory meaning some financial transactions that aren't impacting the bank directly for example then it kind of complicates the bank feeds a little bit. So the general rule then is we will look at bank feeds and we'll talk about all these issues when we get to the bank feeds. But first we're going to go over the normal bookkeeping process to basically learn the bookkeeping forms because that will help us to understand how to implement the bank feeds when we're using the bank feeds. If you have an easy kind of bank feed setup you're in a cash based system and you just want to connect to the bank you could jump forward to to the bank feeds directly and go through that section there. But I highly recommend if you want to fully understand things and you don't have a full grasp on how everything works that you first think about the forms and the reports and so on. And you'll have a much better grasp it'll be a lot easier to then enter the bank feeds.