Join Bonnie Biafore for an in-depth discussion in this video Tracking details with subaccounts, part of QuickBooks: Advanced Bookkeeping Techniques.
- Chart of accounts is accounting speak for the list of accounts you use to track your business finances. And financial reports, like the profit and loss report, use your company's chart of accounts to show financial results. You can gain deeper insights into your company's performance by taking your chart of accounts to the next level. To see the chart of accounts for your company, on the homepage, over here in the company section, click "Chart of Accounts". That opens the chart of accounts window.
And here you can see all of the accounts that this company file uses. Let's take a look at a profit and loss report to see how the program uses these accounts. I head up to the reports menu, and I created a memorized report, so we're going to point to "Memorized Reports", go to the "Two Trees Olive Oil Custom Reports" group, and choose "Profit and Loss Q3". And this shows a profit and loss for the third quarter of the year. Now you can see in this example we've got a travel account, which is at the top level.
All of the money for that travel was all bundled into one. But this is a perfect example of how you can get more detail by using parent accounts and sub accounts. Meals and entertainment are handled differently on your tax return. Most of the time they're only 50 percent deductible, whereas the rest of your travel expenses are 100 percent. Let's go back to the chart of accounts window, and create a couple of sub accounts for travel. To do that, head down to the bottom left corner and click this account button.
Then choose "New". Travel is an expense, select the "Expense" option, and click "Continue". We've got the expense account type is already set. In the account name box, I'm going to type "Lodging". And we want to make this a sub account, so we turn on the "Sub Account of" check box, click the down arrow, and choose "Travel". Now in the "Tax Line Mapping" drop-down list, click that down arrow. I'm going to scroll down to other deductions until I see "Other Deductions Travel".
And select that. And I can click "Save and New" to create the second new sub account. The account type is still expense, so I can go ahead and type the name. It's "Meals and Entertainment", it's also a sub account of travel, so I turn on that checkbox, click the down arrow and choose "Travel". In this case, I click the "Tax Line Mapping" down arrow, and I scroll down until I see "Deductions".
"Meals and Entertainment Subject to 50 Percent", that's what I want. Click it, and now I'm going to save. Click "Save and Close". Here you can see I now have a parent of travel, with sub accounts, lodging, and meals and entertainment. Alright, now this company has been around for a little while. I happen to know that there are just a couple of transactions that use the original travel account. That's why we saw that value in the report. I click the background on the home page, to bring it to the front, and I'm going to head to the vendor center.
Up in this top panel, click "Vendors", and then click the "Vendors" tab. Now I know that At Inc. is one of the vendors that used the travel charge. I select it and now I can see one transaction in this table. To open it up, I just double-click it. And it opens up in the "Enter Credit Card Charges" window. Yep, sure enough, there's travel. I click that cell, get the down arrow, click that down arrow, and now I can assign it to "Lodging", because it is lodging.
Then click "Save and Close", and click "Yes" to confirm. You get that happy little beep to let you know that it worked. Now Vinery is another vendor that had a couple of charges to travel. I select it on the left-hand side, and in this table I can see the two charges. Once again, I'm going to double-click the first charge to open it up. Yep, got a travel account, click that cell, click the down arrow, and this time, "Meals and Entertainment".
Click "Save and Close", and "Yes" to confirm. Alright, one more transaction. Double-click the second one, click the "Account" cell, choose "Meals and Entertainment". Click "Save and Close", and "Yes" to confirm. Okay, so now I've edited the transactions that were using the parent account. Let's take a look at that Q3 report again and see what it looks like now. I'm going to head over to the left side of the screen, to the icon bar and click "Open Windows".
That shows me the different windows that I have open. I'm going to click the "Profit and Loss Q3", and it says the data has changed. Well, yeah, I know it has. I want to see those changes, so I click "Yes" to refresh, and now look what happened to the travel account. We've got the parent account, nothing is assigned to it, but now the values are assigned to "Lodging", and "Meals and Entertainment". And, sure enough, the line shows total travel, shows the original amount that went to the top level travel account.
Now the great thing about using a top level account and sub accounts, is that you can either show or hide the details. For example, if I want to hide it and just see the total travel, I can click this triangle that's right now pointing down to say it's expanded, click that, it flips over to pointing right, and it collapses it, so now it looks like it did in the very beginning, when travel was just a top level. And, sure enough, there's that original amount.
If I want to see the details, I can click the triangle again, and now the sub accounts show. That's how you use sub accounts to evaluate results, either at a high level or in detail. In another movie you'll see how to use accounts to examine your company's profit and overhead.
- Recall the information displayed in subaccounts.
- Explain how to view and track overhead costs.
- Summarize the steps to view all expenses related to a specific job.
- Recall the steps for categorizing customers, jobs, and vendors.
- Describe two methods for recording prepayments.
- Identify the steps for selling consignment goods.
- List two documents you can use to record a refund.
- Explain how to handle a bounced check.
- Detail your next steps if you cannot reconcile a bank statement.