Basics to Quickbooks Part 2
so there's a point, and I know this gets tedious going through all these screens. But this is something that accountants and business owners do all day long, where you click on the amounts in the reports to find the detail. And by the way, if you had 30 account receivable transactions and you clicked on this number, they would all 30 be listed there. You get all the activity. Let's click on checking. I tell this the students a lot, Um, when you're trying to figure out this whole debit and credit thing, you know, I don't even know where to begin. You know, I made there's this transaction happened. I can't figure out the debits and credits what I always suggested. Starting point is. Ask yourself if anything happened to cash, because in most cases, half of your accounting transactions that you are putting into QuickBooks will involve cash. Probably now that might be paying down a credit card that you used to use the credit card to pay for things. But it's likely that a lot of transactions...
will involve cash so that when you're trying to figure out what happened in your business, ask yourself that anything happened to cash, and that's your starting point for doing a journal entry. What you see on this transaction report and again, we got to it by clicking on the balance sheet report and clicking on cash. These are all the transactions that involved cash. Okay, all the transactions that evolved cash. Now another note. Let's click on a journal entry. My suggestion to you is that you do one debit and one credit per journal entry Onley. In other words, if for three or four counters or are affected due them in groups of two give you an example. You sell a piece of inventory that cost you $100. You sell it for 175. There's two journal interests. One is you're going to reduce inventory and recognize cost of sales. That's that's a Devon credit. Do that by itself. One journal under the other journal entry is you're going to record a sale for $175 receivable. Separate journal entry. Keep this stuff separate. What I'm getting at is you don't want when you're a beginner lines and lines of journal interest cause it's too confusing. Do one debit and one credit at a time. Okay, So what we've done so far as a way to start getting you comfortable with navigating QuickBooks is to go through the balance sheet and click on each of these amounts and find out the transaction that created the report. Okay. And again, balance sheet is a snapshot in time. It's one day today. What about if I clicked on the income statement? Profit and loss? Remember, it's called profit loss and QuickBooks and I'm gonna do year today same process, that is. You can click on each one of those numbers and find out where they came from. Now, let me mention a number that is not in my slide deck that I have the mouse next to gross profit. Okay, this is a term that may or may not be useful. It's up to you. Gross profit is sales less the cost of your sales. Or if you're Levi Strauss and you're selling brewed blue jeans for 50 bucks and the cost is bucks, your gross profits. 20 bucks. That is not all of your expenses because you've got to pay payroll and insurance and the lease on the building blah, blah, blah. But gross profit is a nice number to think about because gross profit tells you how big is your profit before I consider all the other stuff that didn't directly relate to the sale? How big is my profit? Before I consider all that other stuff that didn't relate to the sail directly like insurance and payroll and all that other stuff that may help you in your business? It may not. That might not be meaningful, but I wanted to mention gross profit review, the Journal entry credit, debt meaning and there was a little confusion in the chat rooms in regards to that. Okay, let's go to reports. Let's go to balance sheet and let's pull up a journal entry. And let's review what that means. Well, that's invoice. We know that's not a good example, because that's another. That's an extra step. Let's go toe one that it was not an invoice. Let's go to the prepaid insurance que review. Okay. I'll leave it on the Let me get to the journal. Right there. Okay. Review. Debits are always on the left. Credits are always on the right. Okay. Assets are increased by debuting liabilities and and an equity or increased by debuting. Davidson left pretzel, right? Always. Always. Always. Assets are increased by debuting, which is why prepaid insurance and asset is debited when we increase it. Checking is that auto insurance ever gonna get expense. And I'll cover that. I'll tell you now, but I'll cover. Also covered in more detail later. Let me finish the explanation of the journal entry. That'll answer that. Okay, prepaid it. Prepaid insurance is an asset. We debit to increase it. Checking is also an asset. But since we wrote a check and it went down, we credit to reduce it. That Okay? Okay. What? The question is, when does prepaid insurance go away? That is, when is it get credited? 20 Okay. How are you going to remember that? You need to do that. Okay, that's even better. Question. Couple ways. One way is when I print out my balance sheet. I see the balance right there. That's one way. However, the better way is if it happens every month, and it's always $100 is to create those reminder transactions that pop up on your screen and say, Hey, do we need to post prepaid insurance. $400 again. Okay, let me tell you how it goes away. And I'm gonna create a journal entry, which will help with the question that we had on the chat. So I'm gonna go home. Well, I did. Wrong home. Create journal entry. I happen to be on journal entry number five. So this is a good Let me tell you what we do and then let me do it. What we do is when that month passes, we paid it. We paid in the February premium in January. When February's over, we move it from prepaid asset into an insurance expense account. Because that's an expense that occurs with the passage of time. So your interest on your loan occurs with the passage of time. Depreciation on your assets occur with the passage of time. Same with this one. So how would I do that? Let's do a journal injury. Okay, I click on the account screen now. I have two choices. I can pick an existing account or I can create an account. I need to have an insurance expense. Well, gee Wiz, do I have an insurance expense here when you scroll down, you'll notice that the accounts that you scroll down, or or in order that's all the asset accounts, that liability accounts, its equity accounts, income. And then we get down to insurance. So there is an insurance expense account. Click on it. We debit to increase expenses, and we credit to increase revenue. That's new. I have not covered that yet. We debit to increase revenue. We credit to it. We debit to increase expenses. We credit to increase revenue expenses. Debit revenue credit. Okay, so on this day, I'm going to say that it's January. I'm gonna pull it. My count on it. It's the end of the month of February. So if you need to change the date of the transaction boom into February, please be careful with the dates. It's important because you want to get the financial data in the right period. Okay. Please be careful of dates. 100 description, please. Right. Descriptions to expense. Prepaid. Now, let me say this way. January prepaid insurance. We were talking in the break room about accountants and how you know, as an accountant, your unfortunately, one of the things you guys will have to do is creative, folks is to be a little bit methodical and be a little bit boring. Okay, I'm boring. I get up in the morning. I had this exact same morning routine. I go to the same coffee shop. I sit in the same seat the people of Panera. When I start to walk in the door, they make me what I want. Why? Because I get the same thing every morning and I sit in the same seats and I opened up. And I look at my email accounts in the same order, and then I write some of the book and methodical. So unfortunately for you guys to do accounting and QuickBooks, you're just gonna have to be a little methodical. And that includes putting in these descriptions. Yes, I know it's tedious, but it will save you when you have to go find a transaction. Okay. You could put a name over here. Your insurance expense does not apply it. Anything specific, so I'm not gonna do it. Okay. Look at the bottom. Do debits. Evil credits? No, the system will not let me post this century. That reminds me that well, let me finish this and then I gotta tell. I got to tell another story. Yeah. Yeah, it's exciting. Now. We had a balance and prepaid insurance that we debited to increases in asset. Right. We are now going to credit. Thank you. Credit that account. Now the question is, Well, how do I find it? Well, think about how the chart of accounts is set up. If it's an asset account, it's going to be near the top. Look at that asset. Boom. $100. And look how the $100 automatically posted. Why? Because I had a debit with no credit, so it automatically filled and the description automatically filled. Okay, Careful of the bottom of the screen bottom. Right. This could save some time. Save and close means it's gonna post the journal entry and go out of this screen. Ceva. Nu means it will give you the chance to post know the journal entry. So I'm gonna hit save and close journal. Five saved. They're all number. Okay. Let me go back to reports. Let me go to profit and loss. There's the There's the revenue that we earn when we went to Riverside Restaurant and we build them. Here's some mileage expense for travel to do. The photography shoot at the restaurant here is the cost for processing. Let's click on that one that when we have not dealt with yet. We wrote a check to this vendor Reliable technology. What do we do again? You gotta write this in yourself. We wrote a check. If I click on, you'll notice that we have different transactions. We could have a transaction type of an invoice. We envoy somebody. We can have a journal for a journal entry. We can also have a check. If I click on this, let's see what happens. It shows me the check data that I wrote, and it's Chuck number one. Okay, so what I tried to do in this overview is to look at the profit and loss Click on each one of the numbers. So you see where they come from for just the stuff I put in so far. And look, I'm gonna change the date. I'm gonna make it the end of look. There's no insurance expense in this one, is there because it's only through January. If I click on February and I hit run report. Oh, there's the insurance expense and Spence Insurance. Okay, let's create. Um, that's what I want to do next. I want to create another vendor and another customer. So let's create a customer. We've done that yet. New customer. Okay, let me before I lose you. Customer left. Drop down. New customer click. You get a whole bunch of data which you don't necessarily have to figure out completely for a customer. Okay? You could put their name if you wanted to. If it's an individual, I'm going to say the clients. Parkside Financial. I remember the monsters. Remember where they lived? The street address? 13. 13 Mockingbird Lane. If I can spell it. Okay, close enough. So you get the idea. Other data you could put in you could put in shipping information. Sometimes the you need the shipping address, which could be different from the billing address. Maybe they have a corporate headquarters where you build them. But you're shipping your product somewhere else. Okay. Phone number, information website, All that jazz. Okay, So I have created a customer. What's an example of a sub customer? So if Parkside Financial is a client, if you were, if you have three people within that organisation who sold to three. So Parkside Financial has an insurance business and a banking business. If you hit sub account, it's going to put underneath Parkside as a customer. Thean department side insurance in the Parkside Financial Underneath it. Okay. And speaking of which, you can also say Bill with parent. Which means you, Bill, even though there's a new insurance and banking sub component, you build in the same place you built to the same place. Okay, so we created a customer. This is nice to which they used to on the old QuickBooks online didn't do well where they tell you. Big parks. I clients say they tell your really big. So you remember what you did and even see now under customers, we have to customers. Riverside has an open invoice, which again is unpaid parks that we haven't done anything with yet. Vendor. So I got a technology company. I gotta supply company. Let's create a new vendor. So, Christine, what would be A or Candace or somebody? What would what would be another vendor? That you would use a generic type of thing that you would use a vendor, another photo company like DTC. Okay, so again you can you can create one of the big streets in ST Louis is Lindbergh Boulevard. There's a very good biography of called Limburg, but a guy named Scott. What's his name? Great biography of limber. If you do nothing else, read the 50 pages on How on the Lindbergh kidnapping. It's fascinating. 50 pages of that book Scott can't think, was named. So now I've created a vendor. But what happens when I save it? Oh, before I get there, you can create your own internal account number if you want for a vendor as another way of sort of identifying it to you. This account number could also be your account number at that vendor. So image photography is number 345 so you can put that in there. What about billing for Is that under other on that last you can. The easiest way to set that up is is to set up an invoice that will pop up. So let's say they order stuff from you every or you order stuff from them every month. You can have a what I haven't done. You had a purchase order, which is you formally ordering something for somebody? Pop up automatically and you get ding. Do you want to do this purchase order again and you say, Yes, you can change the amount, whatever, and it could be a re occurring transaction. Yes, and then what about from the other way from, uh, customer that you built? You could set up an invoice that's recurring. That's so you get a reminder. So it's not under the customer set up where you could do that. I saw something. There is, I think it's eat. My preference is, yeah, excuse me recently paid. Ah, my preference is that if it's a if, it's if you're a vendor to set up a purchase him purchase order. And if you're it's a customer, set up an invoice rather than doing it on the customer and the vendor screens do it on the invoice and the purchase order screen. It's a preference, a long story short. I think it's easier. I think it's easier. Okay, so what we have done is let's think about what we've done here. We have covered all buttons across the top. We've covered all the bottoms along the side. We showed you reports, balance sheet profit and loss. We clicked on the numbers within the reports to show you where they came from. And we also posted a journal entry. So again, this is a lot to throw it somebody all at once. But hopefully you can start to visualize if I need to do something. Where would I do it? If I need to find data, where on the screen would I find it? That's what I hope we were coming out of this segment with that, you know, you're starting to get a little feel for how do I navigate? What do I have under the wheel? What if I have to create a transaction? Okay. Just starting to get a feel for it. And again, let me say one more time that the way to post transactions initially is to do a journal entry. Okay, do a journal entry. And again, we already posted number five to number six. Popped up. Okay, Any questions? That's a lot throwing people that is taking a drink with fire. That's a lot. But it's a start. So there, when you guys go into QuickBooks online again either on your own or when you see this again tomorrow, you will say, Okay, it's not totally foreign, you know, is not totally formed