do you need to make personal individual financial statements
well in that case you should start by looking at your profit and loss
if you have any questions about this topic you can leave them in the comments section below and i'll
do my best to help you and of course if you feel the video helped you i hope you will click like
and don't forget to subscribe to get updates on new videos that come out all the time
profit and loss statement sometimes called the income statement shows how well you
operated regarding how much of your earned money you were able to keep
it shows how well you did during a specific period of time quickbooks gives you the
ability to compare profit and loss statements of different time periods you can judge your progress
regarding how you are operating financially from one time period compared to another time period
for example let's compare how well you did for the first 10 days of june compared to
how well you did in the next 10 days or we're really comparing joe schmoe so what you do is
from the icon bar you open the regular profit and loss now what we're going to do we're going to
change the dates and then after you change the dates to isolate the time period you're analyzing
you then have to click refresh to get it to work so from june 1 of 2016 we have to change this
until june 10 of 2016 okay change it to 2016.
now that we have the dates that we want well it changed without clicking refresh sometimes if
you change the date and go to the left of your keyboard and push tab the cursor jumps away
and the numbers adjust themselves so we're going to come to the corner and drag it and
squeeze it closed so it populates half of the quickbooks screen and this is how well we did
during the first month of june we netted excuse me during the first 10 days of june of 2016
joe schmoe kept 500 out of the 1500 that he earned and only earned bartending income
but we can open the report again from the icon bar and again put the from date but this time
it will say june 11th until june uh let's say june 20th and let's make them both 2016.
now notice we can go to the corner and then we can squash this one as well manipulating
the window dragging it over now this is how well we did in the first 10 days of june
compared to how well we did during the second 10 days of june of 2016. which one did better well we
kept about a third of the money that we earned in the first 10 days but here you see in the second
10 days not only did we earn more because we also had landscaping income during that period of time
but you can see the net amount that we kept was more than half of the amount that came in
or actually it was about a third of the total that came in was 2300 and this is approximately a third
so you see the expenses increased in proportion or somewhat in proportion
to the income and that may or may not be true but at least by comparing the two financial statements
for the two different time periods you have a sense of how much money came in and why and how
much money went out during each respective time period and y and the end result at the bottom
in our previous video we discussed the idea of net income from operations
this is how well you did regarding income and expenses that relate to how you operate or in
the case of an individual how well you're making a living regarding how much you're earning compared
to how much you're able to save sometimes your income changes for a reason that has nothing
to do with your normal income and expenses if something like that happens to you you should
be able to see your normal income or normal profit from your normal operations and be able to compare
that to your overall net income that includes the rare and unusual items of income or expense
and any time you have an other income or other expense type of unusual situation
it will show up on the profit and loss below the normal net income from operations
this way you can see the normal operating income and the overall net income in the same place
so let's keep comparing these two statements and let's do this example let's imagine that we forgot
to record back on june 3rd that we that joe schmoe the person whom we're doing the home finance for
received a gift of seven thousand dollars this is not a reoccurring source of income it's not really
reflective of how efficiently you or joe in this case operated because it's not earned income and
it's not really in your control who does or does not give you a gift so it should not affect your
income from operations when you're making a judgment of how well you operate it should be
put in the chart of accounts as other income type of account and not just an income type of account
so let's go to the chart of accounts and add that account so we can use it and record the deposit
we click list chart of accounts and in the bottom left of the chart of account window
we click account new now the type will not be income the type instead will be other
income and then we click continue and other income with the cap locks on we'll put gift income
and you can get a gift regardless of how well or how bad you operate during the month click save
and close and now we have a place to record income that has nothing to do with our normal operations
and now let's record june thirds gift obviously we should use the deposits window
so the deposits window we go up here and we click banking make deposit
now it was deposited into the bank account and it was deposited on june 3rd
of 2016. because that's the year that we're using in our example a little story now the account that
we use it's coming into the chase bank account from the other income account gift income
and the amount seven thousand if there was a check number we would put it here if we had the name of
the person we could add them to the list but these are just extra details but look at the profit and
loss at the minute we click save and close aha the profit and loss on the left look what happened
their net ordinary income stayed the same so you know how well you operated during those ten day
ten days but at the moment we recorded that transaction you notice this other income appeared
below the normal operating income and it added 7 000 to the overall net income for the period
so even though you might have operated better in the 10 days between june 11th and june 16th
you still had more net income in the first 10 days because of that gift
now let's do a second example let's imagine on june 23rd of 2016 someone broke in at night
and stole 500 from the cash box this would be an other expense type of account
and we could call it loss on theft so let's record that and see what happens first we have to put
the account in the chart of accounts list chart of accounts account new the type will be other
expense because you have no control over it and it's not part of your normal operations
click continue and the name with cap locks on loss on theft click save and close and now we have an
account to record that transaction into now i'm just going to make this a little longer now we
learned before that we use the banking write a checks window anytime there's a decrease in any
bank type of account including the cash on hand because the cash on hand is a bank type of account
now the transaction says the date the money was stolen was june 23rd so you have to
make it june 23rd and there was no transaction number associated with it there's no payee unless
you know the name of the burglar but the account in this case is the account that we just made
loss on theft so the money came from the cash on hand and went to the loss on theft and the amount
that the cash box decreased on june twenty third was five hundred dollars now we click
save and close the amounts in the profit and loss on the right side did not change because june 23rd
is after this time range so let's do this stretch it a little change this to include june 24. then
push tab aha notice as soon as the time range included the transaction look what appeared
on the bottom of the profit and loss you can see that loss on theft showed up for the first time as
five hundred dollars and notice the gift income did not show up on the right because the gift
income was recorded on june 3rd and the profit and loss on the right only goes up to june 10th
notice the profit and loss on the left does not include the theft because the cut off of this of
this income statement is the tenth the only the theft appears on the profit and loss on
the right because the profit and loss on the right starts with a date long after the gift
and finishes within the time period that the theft was recorded notice you still have the
same amount of ordinary net income actually it's a little different because we change the date
but notice bef under the ordinary income we have the loss on theft and if we made an income
statement for the entire month it would show both the loss on theft and the gain remember
after you change the dates you click refresh now you have the entire monthly operating net income
plus whatever special gift you got which is not under your control and does not reflect how you
operate minus the loss that you had which is mostly not under your control and doesn't have
anything to do how you uh with how you operate to get the real net income during the entire month
you