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3 Steps to Better Financial Statements in QuickBooks Online

April 1, 2022 by Parker Erdall
Client Accounting & Advisory Services

Step 1 – Record bank feed transactions

  • Bank Accounts
    • Categorize expenses to expense accounts.
    • Transfer money to any other bank account owned by your Company.
    • Record Credit Card Payments for any payments from your bank account to your credit card.
    • Match bank feed activity to transactions you’ve already recorded in QuickBooks Online, such as bank deposits from receipt of customer paid invoices, and bill payments for payments you’ve made to vendors.
  • Credit Card accounts
    • Categorize expenses to expense accounts.
      • Credit card rewards – categorize credit card rewards to the expense account associated with the reward. I.e. if most of your credit card activity relates to supplies & materials, then record the credit card rewards to the supplies & materials account.
    • Match credit card payments to the payment already recorded from the bank account bank feed.

Step 2 –Reconcile accounts

  • Reconciling is just a fancy word for making sure the transactions entered in QuickBooks agree with the activity on the bank statement. Here’s a video to show you how to reconcile in QuickBooks Online… Bank Reconciliation (Summary): https://youtu.be/jezAtbPt7g4

 

  • Before you finish the reconciliation, double check the following to ensure you’ve reconciled properly:
    • Beginning balance on bank reconciliation should agree with the beginning balance on the bank statement.
    • Total payments on bank reconciliation should agree with total payments on bank statement.
  • Total Deposits on bank reconciliation should agree with total deposits on bank statement.
  • Ending balance on bank reconciliation should agree with the ending balance on the bank statement.
  • If all the above are true and you have the green check mark indicating $0 difference, then you’ve probably reconciled properly.
    • There might be transactions that are left unchecked. These are called uncleared checks/ payments and uncleared deposits/ credits. If these uncleared transactions don’t have an explanation, then they are likely in duplicate transactions recorded in QBO.

 

Step 3- Review your financial statements

  • Review Reports Monthly
    • Review the balance sheet report as of the last day of the month
      • Assets = what Company owns
      • Liabilities = what Company owes to others
      • Equity = in its simplest form, equity is the amount the owners would walk away with if Company was sold at book value at the report date
    • Review the profit & loss report for the monthly, quarterly, yearly period you wish to look at. Ensure the classification of transactions looks appropriate.