Hello it's Candus, and in today's QuickBooks Tips and Tricks
I am going to answer some more questions about the balance sheet
So the last couple videos I've done
have really been about the balance sheet. One was to understand it,
and then the other one was about depreciation, accumulated depreciation,
which the accumulated depreciation
actually shows up on the balance sheet.
So I was received a couple of questions through my email,
and I wanted to answer those today as our tips and tricks.
So the main question is,
we would really like to understand the balance sheet
and where do we, where do the figures come from?
and do we choose what accounts show up on the balance sheet?
and what are retained earnings? And what the figure?
So let's start with one of these questions at a time.
So let's actually go in and I'm gonna pull up the balance sheet, we're gonna start there.
So if you go under reports, company and financial, balance sheet standard
The first question really was, where do the numbers come from?
So let's go back to that and let's start over again.
So today is September 30th. I can't believe it.
It's the last day of the third quarter already,
we're getting ready to start the fourth quarter tomorrow.
So the first question is really where do these numbers come from?
and the answer is the chart of accounts
So these, the numbers on the balance sheet
the balance sheet decides which numbers are going to show up
based on the type of account they are
So in the previous video, I taught you that there are assets, liabilities,
and equity, and under assets, those are things like current assets,
fixed assets, bank accounts are those kind of things accounts receivable
and so...
inside of QuickBooks, anything that is considered an asset
is going to show up on the balance sheet,
anything that's considered liabilities or equity
and I did this explained in the last video a little bit more about what each of those are.
So basically, anything that's an asset, cash,
Anything you own. Accounts receivable, you know, your vehicles,
that kind of stuff. It's all your assets,
your liabilities are, you know, your credit cards, your sales tax,
anything you owe is going to be under liabilities
and then your equity is, you know, your equity in your business
and that's where the question of the retained earnings comes into place.
So one thing I want to clarify real quick
is when you're setting up your balance sheet, if you are keeping track of
QuickBooks for your business, you're only going to have your
business things in here. So if you own a loan, own a loan,
owe a loan, I can't even talk, owe a loan, personally, that's not gonna
show up on your business balance sheet, you know,
They are different.
So you want to make sure that whatever you put into QuickBooks has to do with your business
if you are tracking your business in QuickBooks.
Now, if you're tracking your personal, that's a different thing.
But I'm teaching you how to manage and grow your business with QuickBooks
for your business specifically.
So...
You want to have all your assets on there,
if your business owns your building that you're in
owns any of your vehicles, then it would be in there.
Now, if you personally own your vehicles, and your business
doesn't own them, then they would not be in your QuickBooks.
Remember, the purpose of the, of the balance sheet is really a
snapshot at one moment of exactly what's happened in your
business for lenders and that kind of thing
and it tracks your assets, liabilities and equity.
So...
If you owe on your credit card, you aren't gonna see your credit card
on your profit and loss, you're gonna see the expenses you incurred to
generate your credit card. So I hope that makes sense.
The same is true with sales tax, sales tax is not a business expense.
It's something that you collect for the state that you owe the sales tax for.
So that is a liability for you
and the same is true for like a loan,
it's not going to show up on your profit and loss,
it's actually gonna show up on your balance sheet.
So I hope that's really clear where those things come from
is when you go under list, Chart of Accounts
over here where it tells that type of account.
QuickBooks automatically knows where those accounts belong,
whether they belong in the profit and loss, which is only income and expenses,
or if they show up on the balance sheet,
which is your assets, liability and owner's equity.
Alright, so I hope that's clear.
The second part of the question, which was where do the figures come from?
They come from your chart of accounts,
They come from whatever you've put into QuickBooks.
Can you choose which account show up on your balance sheet?
Yes and no.
You can choose whether you pick cash or accrual basis.
There's a couple other specialty customizations,
but really, where you're choosing what's gonna show up on the balance sheet
is based of, if you go under list Chart of Accounts,
what you have included inside of QuickBooks,
and whatever balance it shows here, or whatever balance is,
as of the date you pull it is what's going to show up on the balance sheet
and then what are the retained earnings?
Retained earnings, which are down here.
So you have your equity and you have your net income.
So your owner's equity is money you've put in as a business owner.
You contributed it to the business.
Your retained earnings are any earnings that you've had from any previous years
and net income is anything in the current year.
So let me show you an actual Profit and Loss
reports, company & financial, profit and loss.
So if you come down here,
and you check this year,
this fiscal year to date,
you'll notice 5,819.30
If we pull that over here to the side
Can you see the other one? Let's see if I can, yeah, 5,819.30
See that dollar amounts the same. So the net income is actually coming
from your profit and loss for the period of time,
from the balance sheet knows from the beginning of the year
to whatever date, whatever you've picked in your QuickBooks
and then...
Retained earnings is anything you've had from the previous
and all of the previous years that you've been putting into QuickBooks
So in this example,
you'll notice the retained earnings, right there is $1,730
Well, inside of this QuickBooks, I only have done a little,
I only wrote one expense out for 14 in this example
So it is saying that the profit and loss
is actually a loss of $1,730 for the 2014 year,
that's coming down here to retained earnings.
Retained earnings are anything you've done in the entire time you've had QuickBooks.
So you've had QuickBooks for six years.
If you pull the profit and loss for from the first date, to the end
of the previous year, you would see what your retained earnings are.
That's where it comes from. So I hope that was clear.
So really, the balance sheet is it's just another report
that tracks what's going on within your business.
What are your assets? What are your liabilities and what's your equity?
So how much value so to speak is in your business.
I hope this has been beneficial for you.
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