Wave Accounting - Course 4 - Chart of Accounts, Reporting | Larry Aiello | Skillshare

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Wave Accounting - Course 4 - Chart of Accounts, Reporting

teacher avatar Larry Aiello

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

7 Lessons (34m)
    • 1. Wave Accounting Course 4 of 4 - Chart of Accounts, Transactions, Reporting

    • 2. Setting up Chart of Accounts in Wave Accounting

    • 3. Recording Transactions in Wave

    • 4. Transfers between accts and credit card pmts

    • 5. Bank Reconciliations in Wave Accounting

    • 6. Financial Reporting in Wave: Profit and Loss, Balance Sheet, etc.

    • 7. Final Course Wrap Up for Wave Accounting

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About This Class

A small business needs to have a good accounting software program to help keep track of its finances and to help make decisions. You are setting yourself up for failure if you don't have useful and accurate business information. This course will go over an accounting software program that can help you organize and take control of your finances.

Wave Accounting is a software package designed for the small business that is FREE to use and is cloud-based.

In this course we will look at the features and functions of Wave Accounting Software and how it can help your business.

This course, the FOURTH course of a FOUR PART Series and will go over:

* Setting up a Chart of Accounts
* Recording Transactions
* Transfers Between Accounts and Credit Card Payments
* Bank Reconciliations
* Reporting (Financial Statements)

Designed for the Entrepreneur or Small Business Owner

I have designed this course so that you can learn how to handle your own bookkeeping function if that is your desire and you want to save money on hiring an accountant.

About the Instructor

I am not affiliated with the software. I am an accounting professional with over 30 years of accounting experience and I can teach you how to use the software. I have been using the software since 2015 and discovered it when I wanted to research for a client a more affordable solution than QuickBooks.


So join the course today and learn more about this powerful financial accounting software!

Meet Your Teacher

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Larry Aiello


Hello, my name is Larry Aiello and I am an accounting professional with 30 years accounting experience and a graduate of the University of Florida.

My experience covers a wide variety of industries including real estate, healthcare, financial services and doing a lot of different tasks related to the business world. And I’m also a big geek in figuring out how the computer can improve our lives.

I really enjoy teaching and sharing my knowledge with others no matter what the subject matter.

I grew up speaking Italian at home and developed a love for the Italian language at a very young age as we would travel back-and-forth every year to visit my family and friends. Early on I realized that knowing another language is indeed a gift. It allows you to have relation... See full profile

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1. Wave Accounting Course 4 of 4 - Chart of Accounts, Transactions, Reporting: Hi. Are you a small business owner that has overwhelmed by keeping your accounting records straight and looking for a program or system to help you without breaking the bank. And I might have the perfect solution for you. My course, we'll go over a program called Wave accounting, wave apps.com, which is a Cloud-based solution that is perfect for many small businesses. And the best part is that it is free. With the program you can build your customers, receive payment by credit card for a small fee like PayPal. Organize your finances and assess how your business is doing financially. All the standard accounting reports that you or your tax person needs is part of the program. In this fourth and final course on the Wave accounting software, we will look at setting up your chart of accounts, entering and categorizing transactions. We'll look at transfers and credit card payments where you can set up your credit card transactions to flow into Wave accounting. We will look at bank reconciliations and we will look at the reports that you will need for your business profit and loss statement and your balance sheet and other reports that your investors or tax professional will need for your business to help prepare your tax reports. So thanks for stopping. By my name is Larry ILO and I have over 30 years of accounting experience. And I can help teach you this program and about two hours of class instruction. So what are you waiting for? Get started today so you can get a better handle of your business finances. And I will see you inside the course. 2. Setting up Chart of Accounts in Wave Accounting: I want to welcome you back to another lesson. So in this lesson we will go over setting up your chart of accounts. In wave accounting, a chart of accounts is basically a list of your accounts, of the financial accounts that you the necessary to keep track of for your financial purposes of your business. And the chart of accounts is usually very much determined by the type of industry that you are in. So you'll see Sally's hair salon and Jill's hair salon will have very similar chart of accounts usually. And luckily for you, many accounting programs like QuickBooks, Peachtree, and wave, they'll set you up with a simple chart of accounts. And they often have some tailored accounts for specific industries. So if we go down memory lane. So remember when in the lesson when I set up the new business for my speech therapy client. In this section, when I determine what type when we picked what type of business that it was, we were setting up. This section right here will determine a lot of what the chart of accounts will be. They will give you a sample chart of accounts based on what you're picking here. So now we'll go back into the test company here. And an order to pick a chart of accounts or edit a chart of accounts here will go into accounting and then you click on chart of accounts. So here your chart will be based on five different types of accounts and there's some subcategories under these, but basically, your account for financial accounting purposes will be grouped and organize into one of these five categories. Now when you connect to a bank account, it will automatically create the cash account for you. When you create, when you connect to a credit card account, it will create a credit card account in the liability section and place it here. And then you can add and subtract any other accounts that you need based on the particular needs of your business. So here I'm in the income section. And if I want to add a new account, I will just so like income. And I will create an income account for this sample chart of accounts. So I'll create one for consulting revenue. I will give it an account I D number will probe at say, 41 thousand maybe 4100. And then here you can type in a description of the news that, oops, revenue. Yet spell today. To Consulting Services. I will save it. So I recommend coming up with a numbering system based on something like this. This is what you typically see the assets being in that 1000 section. Liabilities in the 2 thousand numbered section, equity, three thousand, four thousand for revenues and 5 thousand for expensive. Now you don't have to have numbers. But I disliked. I think it keeps it cleaner and will cause less confusion going forward if you have numbers associated with your account. So heading on back over into Wave and tit for example, here you see advertising and promotion. But here this is the sample one already given. But I'm going to then edit it and then edit here and then here I can pick a number for that business. Use 5200. And I will save it. And let's say you think you're not going to be using a particular account for whatever reason? Let's say, Hey, I'm not going to have vehicles in my business, so they're not going to be any vehicle insurance for my business. So I could just click here and prevent the use of that account in the future and it will get rid of it. And the nice thing about Wave is once you have your chart of accounts set up, go to your reports. And these big three, the top three reports here, Profit and Loss Statement, Balance Sheet and your cashflow statement. These will be all generated were driven by your chart of accounts. So you get your chart of accounts set up properly. These three statements will be properly set up. You don't need to do anything to set up these reports. These reports will be driven based on how your chart of accounts is setup. So that will conclude the lesson today on chart of accounts, and we will continue on in the next lesson. Thank you. 3. Recording Transactions in Wave : Good day or good evening. This is Larry ILO. So in this lesson, we will take a look at recording transactions in wave accounting. Now this is probably where you or your accountant or bookkeeper will be spending most of their time in the software. And this is an important part because if your transactions are categorized properly, then all your reporting will be proper as well. This goes back to the old saying, garbage in, garbage out. So make sure your transactions are reported, recorded properly, and then the reporting will take care of itself. Now there are three ways you can bring in the activity, bringing transactions into your wave accounting software. The first way, which is what I like, is by automatically linking up to your bank account. Now not all banks have the ability to have their data imported into wave, so you'll have to check with your bank. But a lot of them now do most of the major ones do. Second way is you can upload banking activity from your bank either in a quick and file or a QuickBooks online file or CSV file. In this class, there was an example of me uploading banking activity through a CSV format, which is one that I like to do, two. And then you can also record manual entries as well, journal entries recording income and or expenses. So let's head over to the test company and we'll head over to accounting. Then we'll click over here for the transactions. Now brings up a transaction. These are transactions that have been imported with through my bank and feed. And basically here, what you wanna do is categorize these transactions individually to the proper category, and then you want to mark them as being reviewed. So wave does a pretty good job, not a great job. Quickbooks Online is better if you want to have your transactions automatically categorize QuickBooks Online. You can set up rules where, hey, if you see something from Office Depot, then put it to office supplies. But but wave does a pretty good job, not as good, but a pretty good job of automatically categorizing some transact. And so here it sees that it's an AT and T bill. So it's putting it to my wireless account or wireless expense here. And I can pick from various expenses from here, from the dropdown. We will just leave it here. You can double-click and you can add in more activity. You can add notes if you wanted to. You can save it here. And you can mark it as being reviewed here, which I will do. And I could add a vendor here if I want. Track at the vendor level. And here I can include at a customer include sales tax, which wouldn't be relevant in this case, but, but the screen allows you to do that at that level. So we will save that. And now that has been verified, that has been reviewed and verified. So there you see that green check. So remember we're still on the first way of, of looking at banking information that has been imported. A nice feature about way is you can select multiple transactions and edit them. Here. I could change the category. Well, I'll just say this is consulting revenue. We can mark these as being reviewed. We will apply it and it is done. So now those two transactions are reviewed on select those. So here you have a filter. You can filter by category if you like. All status as I like to do not reviewed and apply. And then I can just look at these transactions individually and then review them. Once they're done, then I know my task is done. We will uncheck that. You can look at deposits, withdrawals, or journal entries, will clear all filters. You can pick from certain date ranges here, from two. And there are even more filters when they were modified, when these transactions where modified. So I like this feature here where you can, where you can search, filter and also do a search by description as well. Now we'll take a look at the second way which is uploading banking activity. So if we go here and upload a bank statement, here, we did this in another lesson, uploading a CSV file, but you can also do a QuickBooks, Quicken Microsoft money, simply accounting, you don't see see to simply accounting or the Microsoft Money as much anymore. Quickbooks Online and quick and files are very popular with banking software that you can get from your bank. And of course, a CSV file is also pretty common. Well, head on back. And then here you could also add in an income. This will be basically a journal entry. You can say, hey, I received, let's say $200. This was a deposit. You can encode it to your income. Code that as consulting revenue. And it came into which BankAccount that it go into you after you've received cash, then you would do that transaction like that. You can also add an expense in the same manner. That would be money coming out of your cash, coming out of the business or cash account. Or you could just do a traditional journal entry with a debit and a credit. These over here. When you add an income or an expense, it's basically debiting or crediting Wanda your cash accounts over here. And you do this way. Basically gives you a little bit more flexibility in creating your journal entry to get with your accountant or bookkeeper if you have any questions on adding transactions in this manner. And here it shows those transactions that I did not complete. So I will go ahead and delete those. So there you have it. So we looked at the three ways you can add transactions into wave counting. And this will be a good spot to stop this lesson. So in the next lesson we will look at how you record transfers between cash accounts and if you're making payments on your credit card transaction or lines of credit and Wave account. And I'll show you how to record those properly. So we will continue on in the next lesson. Thanks for joining me today. 4. Transfers between accts and credit card pmts: Okay, welcome back to another lesson. So in this lesson we will look at transfers between accounts. These are just special circumstances, are special transactions that we will look at in this lesson. Where you're transferring from one cash account to another, or you're making a payment on a credit card or a line of payment where you're basically taking money from your cash account and you're decreasing your liability to your credit card company. So let's take a look at this transact, and this will be an example of a, of a payment made on a line of credit. Here you see a payment made of seven hundred twenty nine twenty eight coming out of a bank account and it's going into a line of credit or being paid against a line of credit here on the 18th. So if we were to look at this journal entry, which is a little beyond the scope of this course. I have another course on this platform that goes more into accounting. You can check that out if you like. But if you were to look at this journal entry, you would see that it's debiting the line of credit, which is a liability. So it's going to reduce it. And it's crediting your cash in your bank account which is an asset. It's reducing that amount. So you could have if you wanted to, you could have set up a wash through Account has like a credit card in process account that washes through this transaction. But we don't want to pick a an income for the money coming into one account and we don't want to pick an expense for the money coming out of one account. So we will use it transfer feature in Wave. So we will go here. Let's just click over here and we will scroll down. Transfer from, will pick this one, transfer from bank, credit card or loans. Here it sees the account with the matching transaction. We will pick that one. We will save it there. And now here, when you look at the transaction, you'll see the transfer from the bank account, transfer to the line of credit. Then we can mark these off as being reviewed. So now we'll look at another example where we are going to transfer money from a savings account into a checking account. That journal entry would be debit. A checking the checking account for $1000 and a credit to the savings account for $1000. And I will show you how to handle this in wave counting. So we'll head on back over to the test company. And here we will. You can either add income or expense. It doesn't matter. Here we will put a bank transfer. Now if this came in from the banking activity like we saw in the previous example, you'd see money coming into one account on money coming out of one account. Well, we would just do it this way. So we're adding the transaction, the transfer manually. Here we'll say this is going to go into the checking account as a deposit. Could have taken a withdrawal from the saving, but we'll do it this way. And then here when we pick our category, our expense category, we really want to pick this transfer from. Scroll down and we'll pick the savings. Click say, well x out of there. And here you see the transfer that was created from one account, from the savings account going into the checking account. So that will wrap up our lesson for today. If you have any questions, please leave them in the discussion board and we will continue on in the next lesson. Thank you. 5. Bank Reconciliations in Wave Accounting : Good day and welcome back. This is Larry ILO. So in this lesson we will look at the bank reconciliation feature in wave accounting. You could think of a bank reconciliation like a system of checks and balances. If your bank statement shows that you have $5 thousand in it, then Wave account you want your wave accounting system to also show that your bank has $5 thousand in it. I mean, after all, that's what we want our accounting system to do. We want it to be accurate and reflect what we currently have on hand? And that's what a bank reconciliation as a check to make sure we are in balance with each other. So why bother going through this? I mean, after all, if you're linked to your bank statement and it pulls in all the banking activity properly. You shouldn't have to do this, right? Well, there are some times when mistakes can happen. We don't live in a perfect world. So there are some scenarios that can throw your books out of balance. And one problem is there could be an issue with the banking feed where it didn't pull in a day's worth of data for some reason I've seen this happen on a few Todd, not often, but it does happen for some reason. There's a day of data that just doesn't get pulled in from the banking feed for some reason or other. So in that case, you'll have to data enter in that day's worth of banking activity to get your books back in balance. And I've also seen instances where the banking feed brings in the data twice for some reason or other. So in that instance, you'll have to delete one day's worth of data so your records are not duplicated. Oftentimes when you go into wave accounting, you'll see in the red here that there was a problem with the banking feed. In this particular case, for some reason it did not pull it into credit card information, even though the banking information got pulled in properly from the same bank. For some reason that the credit card and the banking data itself did not pull in all properly. Now usually you can try to update it now by clicking here and updated again. And it will bring in the banking information. And a lot of times I've seen this just resolve itself. The next time it tries to go pull in that data, it will be resolved automatically or you can update it again and bring in that information. And usually that tends to resolve itself. So in this particular case, you can see that it was last updated three days ago. So if you're doing a bank reconciliation afterwards, you're going to be missing some data in this particular case. So let's head on over to the test company. And in order to do a bank reconciliation, what you wanna do is go to accounting and then click on reconciliation. Now you can reconcile banking accounts, PayPal accounts, credit card accounts. Those all can be reconciled using the reconciliation feature in wave. Now it's typically best practice to do your bank reconciliation right after you, your bank statement is generated from your bank. So in early November you'll get your October 31 bank statement. Early December you'll get your November 30th bank statement and you should reconcile your credit card statement right after that statement is generated, usually on the tenth of the month order, 12th of the month. So if your statement cuts off on the 12th of October than on the 13th, 14th, or 15th. Soon as it generates, then you can do your credit card statement reconciliation. All you have to do is change the date. And you'll see in the example coming up in the class, we're going to pick October 31 for the bank statement, but you can pick any date that your statement ends on for the billing cycle for your credit card statements. So let's go ahead and we will reconcile the checking account for October 31. Here you can see the last time it was done was September 30th. You can also click down here and you will get a timeline of the recent reconciliation. Could actually go in here if we wanted to and edit a previous reconciliation. But we will go here and we will reconcile new transactions. So now you see it brought in, it has a balance of one hundred five ninety five. Sometimes it brings in an incorrect balance. The real balance when I looked at my bank statement as one seventy four, ninety five. So that's the amount that should be in there. But I'm going to just put in another number. Let's just say that I, that my bank shows $200.1. In fact, that's really one hundred seventy four, ninety five. So now what you need to do is look at your bank statement and compare. If you have a match against what you're showing on your bank statement, go ahead and click it. And in this case, I'm off twenty-five dollars because I typed in an incorrect balance. The real balance should be one hundred seventy four and ninety five. But if you were to go if you were to have an out of balance condition, you can just check against your bank statement, what your bank statement is showing versus what wave is showing. And this can help you identify if you're missing transactions or if you have duplicate transactions by using this matching feature over here. But now I will just go into this edit feature. I will type in the correct balance. Now it shows that there is no difference and at the period is reconciled. I'll X out of this, go back to the reconciliation tab. Now you see its reconciled up through October 31st. So that will conclude the lesson on bank reconciliations and we will continue on in the next lesson. Thanks for joining me today. 6. Financial Reporting in Wave: Profit and Loss, Balance Sheet, etc.: Good day or good evening. Welcome back to another lesson. This is Larry ILO. So in this lesson, we're going to look at some of the reports here that you can generate from wave accounting. But before we get into the reports, will do a little review. And we're going to come up with three tips here to make sure that you're reporting is accurate. So number one, you need to make sure that you choose the proper type of business during your business setup. If you recall in a previous lesson when we set up the business, you need to make sure that you pick the proper type from this drop-down over here to ensure that you're reporting is accurate down the road. Because what that's gonna do is it's going to set up a chart of accounts, generic chart of accounts based on the type of business that you set up. Which got to number two of our of our tips that we need to be cognisant of. So number two, once your chart of accounts is set up, generically, make sure you modify it or tweak it properly according to your needs and that you may need to get with an accountant That's familiar with your industry or your business to make sure that you modify it and get the final touches properly on your chart of accounts. And then finally, number three, you need to make sure that your transactions are properly coded when they come in from your banking activity in the wave accounting software. So the first report will look at is a profit and loss statement. Basically what this is going to show you is money that comes in the door versus money that went out the door. Your income versus your expenses. And then what's left over will be your profit. Hopefully your profit, or you will have a loss if your expenses exceed your revenue. So here it has a summary. You can also click down on a detail level. Here you have a timeframe, some generic timeframes, yearly. You could view your quarter. You can view monthly, or you can change the date to match according to whatever timeframe you want. An income statement is like a movie. It shows the performance of the company during a range of time. So you can change this timeframe to match whatever you want. And then you can export all of these reports can be exported into CSV format, which can then be modified in Microsoft Excel or changed according to your needs. Or you can do it in a PDF format that you can email to lenders, your tax professional, or potential partners, et cetera. The next report is going to be a balance sheet. This is basically a snapshot at a moment in time of how the health of your businesses, going back to some basic accounting, it's basically your accounting formula. It's going to look at your assets, what you own. It's going to subtract what you owe money to, your liabilities, who you owe money to, and what's left over is going to be the equity of the business. Here you also have summary in detail levels and the same timeframes apply as it did to the income statement, except it's only as of a moment in time. So there's only one date that you can pick here for your balance sheet. It's not like an income statement and income statement you can view from a certain date through a certain date. Balance sheet is only as of a certain date and time. The next statement will be a cashflow statement. And this basically will, will categorize your cash transactions into three different categories. The purpose of a cashflow statement is to show you what happened to your cash from the beginning of the timeframe to the end of the timeframe, that it go up, down or stay the same. And why it went up, down or stayed the same. It's going to break down y, the y into three categories. Whether it's from operations, whether it's from investing activities or from financing activities. And this is one statement that particularly a lot of your investors, if you have investors that they will be focused on here, they want to see what kind of cashflow your business is generating. The next statement will be the sales tax statement. These are some of the test transactions that we did and it shows you the amount due for, in this case, New York and New Jersey. Again, you can pick a timeframe. The next statement will be payroll wage and tax report. If if you are utilizing the payroll service, we're not gonna get into that since that is beyond the scope of the class. Other statements will be income by customer. Here again, you can pick a certain timeframe. This shows me my income by customers for the year. And again, you can export it to CSV or PDF. The next report will be aged receivables. This will show you who is owing you money and how long they are past due. If they are past due, again, you can run this as R1 as of a moment in time. The next report will be purchases by vendor. This will show me how much I spent four of my vendor. Again, you can run it as a certain timeframe. Here it's defaulting for year to date. The next report is age payables. This is who I owe money to and it will show me how old that money is if it's past due, whether it's late or whether I'm on time. The next report is for all the account balances. Show me starting balance, debit and credit for accounting purposes, net change and then ending balance. This is a trial working trial balance. Again, you could change the timeframes. Another report is the trial balance, which is similar. This just shows debit and credit. And if you go back to your accounting 101 course, these two numbers right here, your total debits and total debits must equal. I'm sorry, what I meant to say was total debits must equal total credits. And the nice thing about the software is that it will force you to stay in balance. It will not let you violate basic accounting principles. Finally, the last report, and this could be voluminous because this is all your transactions. This is your general ledger. And you have, you can run it for all accounts or just certain accounts. You can pick your timeframe here gives you the option of accrual cash. And cash equivalents are cash only. You can pick by customer if you like. Here's our New York distributors will update it. It will show me the transactions related to New York distributors will go back to all and this will be all your general ledger activity. And of course, your debits and credits will equal as well on this report. So that in a nutshell, is the reporting that you can do with Wave accounting, everything that you need from a financial standpoint to run your business. You can get a report on in wave everything that your tax professional needs for the most part, there could be mileage and some other things that he or she will ask you. But for the most part, from a business standpoint, everything that he needs to prepare your taxes will be on these reports. Everything that your lenders may need to do a loan for your business will be part of these reports. Potential investors, all the reporting necessary that you need for your business, you can do with Wave accounting. So that will wrap it up for this lesson. If you have any questions, please leave them in the discussion board and we will continue on to the next lesson. Thank you. 7. Final Course Wrap Up for Wave Accounting: So congratulations, you've made it to the fourth and final course of wave accounting. You've completed them all. So be sure to follow me. I have other courses on this platform. You can just follow me in that way. You get a notification for new courses. Or you can head on over to my course page, my instructor page on skill share. And you can see all the courses that I have available on the platform. Thanks for joining me today.