QuickBooks Video 6: How to Reconcile Accounts and Review Reports

And now we're done. We have added all of our transactions to QuickBooks. So the next thing that we're going to want to do is kind of review how they were categorized and make sure that things are looking accurate. If I go to reports here, here's my profit and loss for September. Here are our sales and our refunds. Here were all of the Expenses, and as a business owner, you'll be able to look at these categories and know if that looks high or low based on the month that you had. So I'm reviewing everything. I know what my numbers should look like, and everything looks good to me. So we're good here. Let's also just pull up a balance sheet. And the balance sheet is important because it will help us to identify if we did create any expense accounts as, let's say, bank accounts, for example. So here I can see I have a negative balance in my Chase account because in the month of September I spent more than I received. But I did have a starting balance here that I'm going to need to add. This won't be the case most of the time. This won't be the case most of the time, but because of the fact that we just imported one month of transactions for this video, I'm going to need to add a starting balance. Typically what you would be doing is importing transactions from the date that the account was opened, so you'll be starting with a zero balance and then importing your transactions, and then this number should be accurate for you. Here are— here's my credit card balance, my SBA loan that we talked about, and then these are my equity accounts. This is the amount of money that I took for myself, and then here's that opening balance equity. There's another $269.10 in opening balance equity because what happens when you link a bank account to QuickBooks is The bank tells QuickBooks whatever your account balance is on the day that you created the import. So today when I imported that credit card into QuickBooks, the balance was $269.10. Without me telling it to do anything, QuickBooks created a journal entry to get us to that balance. Most of the time you're going to need to delete that entry. So what I'm going to do here Is click on that balance, and then I can see here that opening balance equity transaction. I'm going to go ahead and delete it because it's going to throw off my bank reconciliation. Okay. Okay, our next step is going to be to reconcile each account. We already added the transactions, and what the bank reconciliation is going to do is make sure that we don't have any extra or missing transactions on our books. So we will go here, let's see, transactions, and then reconcile. Go ahead and get started. Okay, so you should open up your bank statement when you do this. I'm not going to pull it up on the screen because I don't want to share any personal information, but I know that the ending balance on my bank statement is $41,879.82, and that is my September 30th balance, and I will start reconciling. Okay, QuickBooks is automatically going to check off all of the transactions that were added in the bank feeds, and you can see here I have my ending balance My cleared balance is negative $7,088.41. The difference is $48,968.23. That is because of this journal entry that I created to get to the correct starting balance. If I mark this off, you can see the difference is zero and everything is good. I'll show you a few things here. So these green boxes are indicative of transactions that were added through bank feeds. Here there is no green box, and that's because this transaction was manually added by me and not imported from the bank. Another thing to note is that if you have everything checked off and you feel like it's right but your difference is still zero, Maybe you entered the wrong ending balance or the wrong date, so you would go to Edit Info, and this is where you can correct your ending balance or your ending date. If those are right and you're still off, your next step would be to open up your bank statement and have this reconciliation screen open side by side and go through each transaction one by one. So you would deselect all of the transactions here, and then you would see on the bank statement $4,500 deposit, check it off here. The next thing is going to be, you know, this deposit. You'll go down each one, one by one, making sure that you're seeing it on the bank statement, marking it off here on your bank reconciliation screen, and eventually you'll find that either there's something extra or there's something missing, and then you can either add or delete The transactions that should should or should not be there, and then your reconciliation difference should get to zero. So I'm going to finish now. Ta-da! We reconciled the account. Now we're going to do the same thing for our savings account and our credit card account. All right, and now we are all done. So to go through the steps again really quickly, we imported our bank transactions from the bank by connecting it directly to the bank or by importing either a CSV, Excel file, or a QuickBooks or QBO file. We added the transactions here by giving each one a name and an expense or other category, and then we reconciled by opening up the bank statement, entering our ending balance and date, and then making sure that each transaction was there on the books that needed to be.