and now we will learn about recording checks and expenses and what the difference is between
these two you will find that recording checks checks type of transaction or expense type of
transactions are almost really the same thing a check transaction is when you pay immediately
and when you physically give a check this reduces the bank account and it increases the expense or
asset that you paid for with a check you have to record a check number because you physically gave
a check now an expense transaction really has the same result and is really almost the same thing
when you pay immediately now in both cases you record either a check or an expense if you pay
for something and you get it at the minute that you pay that's completely different than the way
we were doing in earlier videos where we first got the bill on one day and then paid it on another
this is different from that this is when you get the X when you when you receive the service
or you receive the asset you pay immediately the expense transaction also reduces the bank account
it also increases whatever expense or whatever ask that you're paying for but instead of recording
a check number you put in the reference field the transaction number and you usually record
an expense transaction for paying online or you record an expense type of transaction if you're
paying from a cash on hand fund or a petty cash fund which we're going to address in the next
video for example let's imagine on February 3rd we paycheck number 3 for $500 to Staples for us
ize supplies will increase by $500 and become 1180 and cash and bank will decrease to 20 1270
because it will go down by the $500 that we just paid in this check the vendors balance will not
change at all and the reason the vendors balance will not change is because if you pay immediately
the vendor does it you don't owe the vendor a different amount because you paid at the moment
you took the service that's the difference between the two transactions you're learning about here
and the previous vendor transactions you learned about in the previous videos so let's go ahead and
record check number 3 on February 3rd for 502 staples you click well let's reduce this here
let's click the plus sign go to the vendor section and click check ok now the date was February 3rd
the vendor that you paid Staples okay now you do have unpaid bills with staples but we are
not going to be paying one of these previous bills what happens on February 3rd has nothing
to do with these previous bills it's for supplies we're paying for today now what we're paying for
is supplies so we click supplies and the amount we're paying is 500 so now we have everything
we need check number 3 paid from cash and Chase Bank paying to Staples for supplies $500 that's
it this situation assumes we physically wrote check number 3 and sent it in the mail at the
moment we click Save and new or save and close good now when we come back to the trial balance
reports my custom reports my trial balance you can see cash and Bank is what we predicted twenty one
thousand two hundred seventy twenty one thousand two hundred seventy supplies are supposed to be
1180 let's see supplies 1180 so we recorded it properly and the results are as exactly as what
we expect now let's do an example of an expense let's imagine on February 4 we payed Rex repair
for a job that we received today February 4 so we paid Rex $1,000 for coming over in an
emergency and repairing something for us and what happened on February 4 has nothing to do
with the previous bills let's imagine we paid online and we got confirmation number 8 7 6 5 4
because every transaction needs some reference number the repair expense is going to increase
by $1,000 so after we record this expense repair expense should become 5050 cash and
bank should decrease by a thousand because we just transferred $1,000 into Rex's bank account
for this repair so the cash and bank should become twenty thousand two hundred seventy
and remember the vendors balance does not change we paid immediately for something we immediately
received and this online transfer has nothing to do with the previous bills so let's go ahead
and record it click the plus sign in the top right and under vendors the first choice is
expense now you notice it looks almost exactly like the check fields the only difference is
this says reference number instead of check number eight seven six five four the vendor
is Rex repair notice even though that we have these bills we're not paying these bills this
is a separate charge for an emergency visit now the payment date we said was back on February 4th
and of course the account is repair expense and the amount is a thousand dollars now it's not yet
associated with any particular customer so this is enough information to record the expense when
we click save after QuickBooks confirms that it's saved we can go back to our good friend the trial
balance and take a look cash in bank twenty thousand two hundred seventy well that's what
we predicted cash in Bank twenty thousand two hundred seventy is repair expense 5050 repair
expense 5050 so that's exactly how to record an expense and that's exactly what the results will
be and again vendors balances don't change because you're not paying a previous bill