Sign Arkansas Banking Profit And Loss Statement Now

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in this presentation we will review the reports we have so far review the balance sheet and profit loss after the first month of data input but before the first bank reconciliation within QuickBooks for more accounting information and accounting courses visit our website at accounting instruction dot info recall up to this point we have taken this bank statement and we've entered this data we've entered all the deposits and all the checks into the system and now the next step is to do the bank reconciliation but we also have these open items so we've got these open items here that we're going to ask about and we're going to need to wreak at agur eyes those and then we're going to need to do the bank reconciliation I'm going to minimize this note that if we missed anything here if we miss input say a check number or an amount then it's okay because we should be able to find that on the bank reconciliation the bank reconciliation is not as powerful as it would be if we were to enter this into the system separately meaning into the checks as we go and then do the bank reconciliation but the bank reconciliation is still something necessary and something we should do because if nothing else it will stop us from having a Mis key and enter in the state data incorrectly in other words this data and this system should mirror the bank reconciliation exactly however in terms of what's in the bank account because we entered it directly from the bank account so it's really checking against us making a Mis key as opposed to if we were going through the system and entering data separately then we would have some disparities between our books and the banks just because of timing differences just because of checks we've written that have not cleared the bank yet we'll discuss that a little bit more as we do the bank reconciliations but before that let's take a look at what we have so far in terms of the reports so we go back to our financials like we're going to look at the main reports we always look at that being the balance sheet the income statement the financial statements or the balance sheet and the profit and loss as called in QuickBooks so let's go to the reports drop down to do that we're gonna go to the financial statements we're going to first go to the balance sheets what I typically we start off with and within the balance sheet we're gonna change the dates I'd like to do it up here so that we can change it a range of dates as opposed to just this date so that when we drill down on the data we can see more information rather than just one date so we're gonna go to customizer reports we're gonna choose to change the date range from oh one oh one one nine to twelve thirty one one nine that's January 1st 2019 to December 31st 2019 and say ok and this is what we have so far all we have is the checking account and that's basically what we want we shouldn't have too much other activity on the the balance sheet because we're on a cash basis so we will see that as we go through some of these open items we'll add a few more things that are we're gonna add a bit more complication than that but note that we're not going to have things like accounts receivable or accounts payable or accrued this and accrued that because we're just on a cash basis so basically we have the cash that we have and then we've got the rest being equity it's a sole proprietor and therefore owed to the owner all we have then is equity on the other side of things the detail of the equity being broken out on the income statement or profit and loss now again it's not gonna be quite that simple because even on a cash basis as we go through some of these open items we'll note that there's going to be some things that we don't do on a cash basis meaning like equipment if we bought a forklift or something we know even if we paid twenty thousand cash for a forklift and we paid all cash we don't typically put it on the books as an expense at the time of purchase although we should under a cash basis method even even under a cash basis we're gonna put that on the books as an asset and and basically you know violate or move away from the cash basis and we'll see it an example of that some other the credit card is another thing that we may want to think about how we're gonna deal with that because we although we paid cash we might owe more on a credit card or a loan that we have we might have we might want to record the loan on the books that we have rather than just the payments on the loan so those are going to be some items we'll talk about and we'll see some more details as we go through our open items but the goal here on a cash basis is to simplify things and notice right now it's very simple here's here's what the cash have is and here's what the equity is in the business it'll get more complicated again a little bit as we go and then we're going to go to the profit and loss or income statement see the detail of this equity so we're going to go to the reports up top we're going to go to the company and financial profit & loss we're gonna change the dates from oh one oh one one nine to twelve thirty one one nine here's our information now note that if you took if you're dealing with a sole proprietor then you they're they might be doing this in large part to see performance and to see what their taxes at the end to help to help have some documentation to do in your in information which could include taxes the balance sheet often isn't necessary for a sole proprietor to do taxes we want the balance sheet and we want to reconcile because if we don't do those things the assurance of the income statement being correct it's very low so a lot of people do their taxes with probably data that's completely not I have no confidence in it being correct at all so if we can if we can enter this data in and reconcile be confident of our banking account then at least we have some assurance a lot more than a lot of people do about the income statement the profit lost this statement that's usually what is provided to a tax preparer in order to enter the information into the tax return so notice the balance sheet the balance sheet is almost our check figure it's our it's our double entry check figure for a small company to make sure that the income statement we're using the the statement we're using the financial statement we actually use for things like tax preparation the profit and loss is correct because we have that balance change system so this this is going to be the statement that really is possibly what we're looking for mainly if it's just for for informational purposes for a year in town of data now here is the detail of what's happening over the time period performance data so we've got the sales and then we've got this uncatted rised income and that of course is something we're gonna have to deal with we put it into Uncategorized intentionally because that cannot be there after we finalized it we can't have anything called Uncategorized income this is there intentionally for us to go back in and see it now the great thing about QuickBooks is that you can just double click on this item to zoom into it and see what's in there here's the date range here's what's in there and then we can go back into these one by one as we go through our our open items and reallocate them as needed so we're depending on QuickBooks flexibility that ability that for QuickBooks to be able to just change anything we want being careful when we do so up doing it systematically but being able to go back in here and say yeah I plan to go back in here double click on this item I don't go back to the register I could find it in the register but I could just change it here this deposit means that that it went into the bank and the other side is going into Uncategorized income this is the account we're probably going to change once we decide what this deposit actually is so that's what we're gonna plan on doing I'm gonna close this back out we'll do the same thing here it'll look much the same closing this back out and then we have all of our expenses if we double click on any expense we'll see the detail double clicking on the detail it'll give us a check not going back to the check register again so we got to get used to kind of even and when we enter the data all into the check register we got to get used to the forms that QuickBooks is going to use on a cash basis typically it'll be a deposit form and a check form so these these checks are really what's being produced when you go to the register and to see that let's let's go to the register go to the reports up top company and financial I'm sorry let's go to banking up top and go to use register and then we'll we'll it opens straight to the register cuz either check open if it didn't open to the register open the check register and you'll note that these little items down here will indicate that these are being seen by QuickBooks as checks this is being seen by QuickBooks as a deposit so if you double click on these little items here like that little chk it'll open what QuickBooks generated the form it generated the check and so if I close that back out if you double-click on this little item here that's what the register is shorthand creating this is a shorthand register for a deposit form if we double click here's a deposit form so QuickBooks sees this as the full form document that's going to be generated when we enter this data directly into the shortened hand register so let's go back to the transaction detail I'm going to close that back out go back to the trial bound or to the balance the profit and loss and so that's this information now all you can see it groups all our categories just as we would need it if we were to fill out say a tax return or something like that or most financial data we would need revenue minus expenses that's all we needed revenue minus expenses and then we've got the Uncategorized expenses very large because some of those uncatted expenses are probably not expenses meaning if we double click on this item we've got these big items here you know this one was going to an insurance company probably not one month of insurance if it's $12,000 so then we've got this one going to Vanguard investments probably not an expense and again these are the areas that we're probably going to veer away from a cash basis we have to put these into the system because we need them to reconcile the checking account I have to put them in there or else I'm not going to be able to reconcile the checking account but they probably don't belong on the income statement meaning we're gonna have to put some items on the balance sheet so these are the problem items we're gonna have to go back in there and deal with and in some of these expenses like again a hot air balloon ride might be personal that's why it's in there so all of these we're going to go back in there and we're dealing with the flexibility we want these to be zero this whole thing has to be zero at the end of the day but I'm going to keep them there until we answer the question and then decide where we want to put them depending on the flexibility of QuickBooks to easily then go back in here just double click on the item that we need change not the eyes than being a check being a check means it's going to decrease the checking account which is what we want of course but the other side the expense account in this case which we might have to put as an asset account or some other of account other than you can expense depending on what we decide with our open items so we're gonna close this back out that's what we're gonna do we're gonna we're gonna end up finding a home for all these but before we do that I'm going to just keep pushing forward it's quite possible we have a client that gave us multiple months worth of information and maybe we want to go through a few months and just keep pushing forward and enter that data as much as we can and by doing this system we've entered the data into the into the system that all the stuff is correct in terms of the cash account it's just where the other side is going to go that we're not sure with and we need to go through these two accounts and recategorize them but as far as the actual cash account the data that has been entered is correct and we can go ahead and actually reconcile based on this information and and and move forward so that's what we're gonna do next time we'll do the bank reconciliation for the first month and then we'll just move right on to the to the second month and keep pushing forward and then ask about these questions reallocate these items when necessary once done we'll see that net income should probably change substantially after we've reallocated those items for more accounting information and accounting courses visit our website at accounting instruction dot info