In this video, author Jess Stratton explains the double-entry system of accounting, and why business applications such as QuickBooks Pro 2017 continue to use it.
- [Narrator] QuickBooks uses what's called a double entry accounting system. This is a formal system that's a world-wide standard for accounting. What a double entry system means is that every single transaction or every record in QuickBooks has at least two records that are going on behind the scenes. There are two transactions, a debit and a credit. And they have to add up to the same amount. Most of the time you don't see that happening. For example, when I create an invoice, and I'll show you how to do that later, you're sending it out to a customer.
And an account of yours is getting debited. That account is the accounts receivable account. It's the account that's waiting for this money. When your customer pays you, that payment gets credited from your accounts receivable. And it's being debited into your company's checking account. Which is where the money is arriving. So if you find yourself creating accounts for everything, now you'll know why. It's because every single transaction needs a double system to tell it where to go to and where it's coming from. In fact, different types of accounts handle debits and credits differently.
In some accounts, a credit means the account is decreasing in value. And in others it means the account is increasing in value. The same goes for credits. Where's the money being credited? Where's the money being debited? It will make a lot more sense as we keep going. But I just wanted to let you know why we seemingly create an account for everything in QuickBooks.
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- Setting up a new company file
- Working with the chart of accounts
- Adding bank accounts and credit cards
- Adding service or inventory items
- Setting up sales tax
- Adding customer, vendor, and employee profiles
- Billing customers
- Receiving payments
- Recording deposits
- Handling refunds and credits
- Paying employees
- Sharing QuickBooks with others
- Running reports
Skill Level Appropriate for all
1. Navigate QuickBooks
2. Work with Company Files
3. Set Up Shop
4. Add Customers
5. Work with Vendors
6. Add Employees
7. Manage Day-to-Day Operations
8. Handle Special Cases
9. Administer Payroll
10. Manage Online Banking
11. Share QuickBooks with Others
12. Find Information Quickly
13. Run Reports
14. Manage Year-End Preparations
15. Customize QuickBooks
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