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When we receive cash the receivable goes away, so we use a positive for receipt of cash and a negative to eliminate the receivable.

The closing amount should be 150 for sales, I incorrectly entered it as 140 and then changed it about 20 seconds later when I realized that the balance in the sales account was 150.

You can add columns for any "accounts" or categories that you want to track separately. If you want to track charges on the credit card I would suggest you add a column in the liabilities section. Good luck with your business!

I think you are referring to the equity side of the closing entry, which is net income for the period (revenue minus expenses). The closing entry for revenue is the amount of revenue for the period (as you indicate) and the entry for expenses are the expenses for the period. The difference between revenue and expenses is net income and it the amount of the closing entry to equity for the period.

@@AccountingOutside PS.. Thank you .. I am starting a consulting business and I am setting up your system in Google Sheets. I think for the first time person ... That using your system helps me understand what is going on ...QB while easy ... and pretty reports - did not help me understand the process.

Revenue and expenses (all all other income statement accounts for that matter) are simply tracking changes in equity for the year. A simple example, if I run my own company and at the end of the year my accountant tells me that my equity went up by $10, my next question is going to be why ... to which the accountant responds that I had $25 of revenue and $15 of expenses, generating $10 of net income that was retained in the company (as equity). Hope that helps.

Not sure about the 41, but the $51 is Sales of 150 minus Expenses of 99. That is your net income for April that gets added to the owners equity at the end of the month.

Generally you are correct with your entries, the $50 in the sales column stays in sales until we close out all the "Revenue & Expense" (temporary) accounts at the end of the period (about 10:50 in the video). The sales column tracks the total sales for the period so any amounts put into it will accumulate over the period, which is different than the Asset/Liability/Equity accounts that move up and down during the period. Because sales and expense accounts only accumulate during the period, we have to close those accounts out at the end of the period so that they can begin to accumulate the sales etc. for the next period. Hope that helps. FYI-negative amounts in the spreadsheet would equate to 'credits' in accounting terminology, and positive amounts would equate to 'debits'. Best of luck!

Sorry about that

Glad it helped

Thanks, glad it was helpful

Good evening... Please did you study Accounting in school?

@@chohwosonia I studied STEM. I have a math degree and bio 2nd major. Chemistry was my minor. I ended up in accounting due to job availability at the time.

There are a couple ways to look at it: 1. Structurally, it has to balance to zero (to your point) and using negative numbers is one way to accomplish that. You could use positive numbers and use formulas in excel to ensure that it balances, but I have found that simply using negative numbers is generally clearer. 2. Conceptually, underlying the worksheet is the notion that assets are positive numbers and claims on those assets are negative numbers (debt & equity). For instance, if the owner invests $100 in the company the company gets cash and the owner has a claim on that cash; so we record it as positive $100 in cash and negative $100 in owners equity. Following this, when a sale is made, cash is received and the owner has a claim to that cash - so we record the positive cash and the negative owner claim on the cash. Hope that helps.

@@AccountingOutside Thank you! This makes sense to me now.

if you think in terms of literally transferring money or value from one account to another what you would get is Revenue -> Cash (amount: 50) so if money moves from one a count to another then one account loses money (decreases) the other increases hence: Revenue -50 Cash +50 or if money hasn't been paid yet then it's Revenue -50 A/R +50 later on when those receivable are paid you get A/R -50 Cash +50 which is why A/R become = +50 -50 = 0

I typically try to get as much on one sheet as possible, to simplify balancing the accounts and reporting.

I'm not really equipped for that - brief questions can be posted as comments but my capacity to address questions is somewhat limited... sorry

Here is the link to one that I put together for using Excel to keep the books th-cam.com/video/HKJjwNMPoI0/w-d-xo.html, I have another one on debits and credits and the accounting system but that is more of a review than a tutorial for beginning the process.

There is a link in the description to a google file that you can then copy to your own folder.

Glad you enjoyed it!

Glad you liked it!

Thanks, glad it helped - best of luck with your bookkeeping business!

Yes, software programs can generate the financial statements automatically. However, within the software someone has to set up the accounts, categorize them (i.e. map them into the correct statement), and then know the accounts well enough to make sure that transactions get recorded correctly. To your point, once everything is set up you don't need an accountant to do the basic accounting work. Maybe someday with artificial intelligence the software will do it all for us, that would be fun to see.

@@AccountingOutside thanks for your feedback regarding this. Are you afraid of losing your job then?! 🤣

There are balance sheet, income statement and equity statement videos that together cover all items in the trial balance.

Glad it helped!

You can treat it as a sale for cash. It should balance out to put a positive amount in cash and a negative amount is sales.

@@AccountingOutside yeah I got it ! Sorry I was putting the amount in cash and receivables and I should leave receivables blank! Lol sorry man this is my first time your video is extremely helpful! One other question if I use cash app and business accounts charge 3% transaction fee for all purchases. How should I categorize that fee? In other expenses??

@@Vj37-42E_U Glad you figured it out! Yes, put the transaction fee in other expenses - or if you want to track it separately and are comfortable with the worksheet you can create a separate column for it. Best of luck

Great suggestion!

Thanks

Glad it was helpful, best of luck.

Reduce cash (negative) and also reduce the capital/equity account (positive).

Glad it was helpful!

Thanks!

Sorry, there is a link to download the spreadsheet that might help.

Thanks!

That works for the first month of depreciation but you will need to adjust the all the following months to just the 2500/48. Alternatively, some people simply take a full month of depreciation the first month of service because it usually does not cause a meaningful difference and saves some computations.

Focus of the video is the process. Formulas were visible in the video, and the full spreadsheet is available to download from the link in the description.

Glad it was helpful.