Introduction to QuickBooks: Bookkeeping Basics

1. Welcome to QuickBooks!: Hello, everyone. Welcome to Introduction to QuickBooks. Bookkeeping Basics, Thistles. The first part of a three part series for QuickBooks training. This class will take you behind the scenes of QuickBooks so you can better understand the reports it produces for your business. Also, if you're looking toe, learn basic accounting and start recording your finances. And QuickBooks, this is a class storage suppressed that enroll button now and let's get started. 2. Introduction to QuickBooks: Welcome to introduction to QuickBooks. Bookkeeping Basics. My name is Liz, and in this video we're going to review what goes on behind the scenes in QuickBooks. This is a Power Point presentation with QuickBooks, so let's get started. Our goal for this video and all of our training videos is for you to have QuickBooks success. And in order to do that, you need to understand some basic bookkeeping principles, and that's what we're going to cover in this video. That way you will be able to understand what your financial records are telling you about your business. So what? ISS bookkeeping while bookkeeping is according and categorizing your financial transactions . So we need to gather all of our invoices, bills and expenses and record him and categorize them any form in order to produce a summary of our financial transactions. When I say a form, if we go into QuickBooks and we look at the home page, we can see here there several forms. For example, our bills will have to be entered in a bill four and our invoices will have to be entered in a crude eight and invoice form. So all these are forms within these forms, we enter the Who, the win and the wood. Simple enough ray. In order to create accurate data to some data entry. However, something happens behind the scenes and QuickBooks, and that's what we're going to learn today. But a lot of you will probably be seen. Why? Why do I have to learn this? Well, it's important because it helps you stay on top of their cash flow. You'll be able to manage your customers and sales better. You'll be able to being compliance and make better decisions. So let's take your look at the bookkeeping process. As we already saw. We need to record our transactions into forms, and then once we enter the data, did it gets posted into a general ledger, and then we can check it in the trial balance for accuracy. And then we can view our transactions in a summary or in the financial statements. Let's take a look at the second process post to General Ledger accounts. QuickBooks puts your accounts into a master list called the Chart of Accounts, and then it goes into a summary of the detail transactions that were recorded. There are five types of accounts that make up the chart of accounts and therefore make up your whole financial data. As we can see here, the five accounts are assets, liabilities, equity income and expenses. These accounts create the accounting equation, which happens behind the scenes in QuickBooks, and we'll talk about this one detail later. Within these five types of accounts, you can have sub accounts. This is an example of a chart of accounts. As you can see, we have our five different accounts, and under each account we have sub accounts. For example, that expense account we have advertising car and truck expands office expenses so we can really categorise are transactions to be more in detail. That way, when we view our financial statements, we have a more accurate picture of what is happening with our company. So this is an example of how you would categorize all your bills, your invoices and your receipts. Now let's take a look at the third process, which is checking for accuracy in the trial balance. Let's see what the trial balance looks like in QuickBooks. This is a trial balance, and as you can see, it's a list of all your accounts from the chart of accounts with their balances in them. But the important thing to notice here is that on the trial balance, there's a debit and a credit, and that's how you can check for accuracy. And we're going to explain this. In order to understand this, we need to know what the double entry bookkeeping ground rule is, And that rule is assets equals liabilities, plus Owner's equity. So every financial transaction that gets recorded into QuickBooks it gets recorded into account with at least one debit and one credit under the county equation. There's always gonna be a balance with this equation. Something has to happen on the left side and on the right side in order to equal each other . So it is important to know how each account will increase and decrease. If we look at this and we think of these accounts are as a T account with the left side in a right side, the left side will always be a debit, and the right side will always be a credit, regardless of which accounts it ISS. However, not all accounts increase the same. If we look at the asset account, it increases on the debit side, and it decreases on the credit side. But the liabilities account increases with a credit and decreases with the debit. Let's look at a worksheet in order to understand this. Better as you can see, here are three of our five accounts assets, liabilities, equities, which make up that count in the equation and, as you can see their sub accounts now, if we do a transaction, let's say our initial transaction when we started our business was to put $40,000 into the bank accounts for the business. We would debit increased cash, which is an asset, and we debit harm. We increase on the debit side, it would go here, and then something has to happen on the right side of the equation. So we credit our equity, and the increase in equity is on the credit side. So we have a balance. 40,000 equals 40,000 40,000 debits equals 40,000 credits. That's our debits equals R credits. Let's take a look at another example. Mark Peattie Bell of 500 that he received 15 days ago. Which accounts are affected? Well, he received a bell, so he put it in his liabilities account. So we credit cash or the checking account and we debit liabilities. If we look at this in the tea accounts, as you can see, we credit cash because we took it out and we step it 500 from the liabilities because it was decrease. So credits equal step, it's. There can also be transactions on one side of the equation, for example, this transaction of $8000 purchased equipment. As you can see, we took it out of Couch in order to purchase equipment. But as you can see here, there's nothing on the right side of the equation. It's zero. Does it balance? Yes, because 8000 minus 8000 0 So zero equals zero. It balances debits equals your credits. So when we go into the trial balance, weaken, definitely check for accuracy. If our deputies does not equal or credits, then there's something wrong, and that's how we can check for accuracy. Now let's take a look at the financial reports in QuickBooks. There are two key reports. The profit and loss would show the income and expenses and the balance sheet, which reflect what our assets and our liabilities and equities are. So let's take a look at our financial statements and see how they relate to one another. Once you check for accuracy, we can go into the profit and loss and look at our summaries. Now, in this profit and loss for 2012 we can see, um, our income in our expenses and our net income of 43 63 now, once the year is over, what QuickBooks does is transfers the net income into the balance sheet. So let's take a look at this in the balance sheet, and here it is 8 43 63 So that's how the balance sheet and profit and loss are connected every year. The balance sheet will carry on your net income for the year and for previous years. Your balance sheet will never close out. It will always change according to the year, but it will always be your profit and loss. It closes out these numbers at the end of the year. These are the numbers that you use for your tax return. Now, how can you check for accuracy in your financial statements? Well, you can do it in the balance sheet and let's take a look at this. We know that your assets must equal your liabilities plus any owner's equity. So let's take a look at the balance. The balance sheet. Ifly, go up here. Here's our assets. Okay, So this collapse thes accounts, we must take a look at it in detail. Okay, here we go. Assets equals liabilities. Plus owner's equity. Same amount. Now, if one of these amounts were different, then we need to go back and go through our try a balance and see which account is off or where it's off. So this is how to check to see if that you entered in QuickBooks is correct. This is what goes behind the scenes in QuickBooks. Now, how can we use the financial statements to keep score and plan for the future? Well, it helps us answer some of the important questions for business. Like, how much am I spending? We can see that in the expense section on the piano. Or am I making any money? Yet? We can look at our net income on the profit and loss or what is my business worth? Well, we can see that on the equity of the balance sheet, remember, the better you understand how the numbers flow onto your reports, the better prepared you will be to make good business decisions. It is great that QuickBooks makes bookkeeping easy for non account users by handling the debits and credits for you. I want to thank you for taking this video tutorial, and I do hope that you look for our other training videos to learn how to use QuickBooks for your industry. 3. Your Class Project: Thank you for taking the class for your class project. Let me know what industry or businesses in in which you will use QuickBooks. Also, take a look at QuickBooks online for free by clicking on the link provided under the class project. I will see you on the next one.