Subtitles of the Movie

Traditionally, we take greater care at year-end when closing off our books. This is the time that we like to ensure that our entries are correct, that we've posted things accordingly and that we're ready for our tax return. When we close a year it's very important not to change entries so that at any given time we can balance and reconcile with the tax return that is filed with the government. QuickBooks now allows us to actually close a period so that entries can not be made. If I go up to the word Company, you will notice that it says Set a Closing Date. When I select this feature, you will notice on the bottom that it allows me to set a date and a password. At this point I can set the end of the month where I do not want any changes to take place. It will lock out all the preceding periods. Now note that I can put an actual password here so that if changes are absolutely necessary, they still can be made. The idea here is to ensure that we don't have incorrect entries posted to a previous year. In the past when we would close off at the year end, we would work with what we call a Trial Balance. Now, the name of this report refers to its original purpose of totaling the balances one very account when we were doing them manually. The idea was we had to make sure that our math was correct and to see if they added up correctly. Now, QuickBooks will not make mathematical mistakes. So we really don't need the Trial Balance; however, this report is the only report within QuickBooks that shows you every account balance. If I open the Trial Balance, you will see that it is a straight listing of every account. It goes directly from the Balance Sheet straight into the accounts that are on the Profit and Loss. This is why it's easy to look at things in one place. At year-end, it is traditional to ensure that every account on the Balance Sheet can be justified. What we mean by this is we will look at our checking account and we will place with our Balance Sheet a copy of the Final Statement from the bank to ensure and verify that our balance is correct. Accounts Receivable will actually go and print out a summary of each customer to ensure again that the balance is correct. This is also where great care will be given to the actual aging of these accounts to make sure they do not need to be closed off. Another item that we will look at on our Balance Sheet is our Partner Equity. Let's actually go to the Balance Sheet for this. You will notice that as of December 31, our partners will show much they have invested and how much they have withdrawn. In this case, Partner One has put in 500 dollars but has taken out 25. Perhaps this was reimbursable expenses that were billed out. Perhaps these were expenses that were paid out of pocket that we did not collect back from the company. Either way, what will be necessary is to clear these out. Traditionally we will do a Journal Entry that will negate the investment and the draw and roll it over to the Equity Account. If I switch our date to January 1, you'll see an example. When I now refresh the Balance Sheet, you will notice that we rolled over our Partner One Investments and Draws into our Equity Account and our Partner Two Investments and Draws into the Equity Account. By rolling these over, every year we can see and track actual activity for a period of time. This makes it easier to answer questions and ensure all the partners and the owners that the bookkeeping is done in the correct manner. There are a lot of other aspects to year end. Keep in mind that there are payroll components that will need to be closed out. There will be 1099s and W-2s and normal year-end reporting. The purpose of this movie was not to really provide a checklist, but just to give you an idea of some of the areas in QuickBooks that are often overlooked.