Preparing financial statements with Quickbooks

When a bookkeeper “prepares” a financial statement, what are they actually doing? You might be under the common misconception that we’re just trying to make the report look nice. In reality, preparing a financial statement for accounting is an important process used to document transactions onto the final statement.

Quickbooks should already be doing a lot of preparation for you, assuming things are being entered correctly. There is a somewhat natural flow from a general ledger of all the transactions to the financial statement the program creates.

What do you need?

When you prepare financial statements, ask yourself what you actually need. Are you looking for cash flow, equity, or net-taxable income? Your accounting should reflect your original goals. If what you are looking for is cash balance, then you will need to look at a balance sheet. If it’s something else, you’ll need the financial statement that fits that need.

Of course, we’re assuming that you’re entering data correctly. If expenses, bills, payments, checks, deposits, receipts, invoices, and other data is already entered correctly, then Quickbooks will do the heavy lifting of plugging that data into the financial statements. That’s one of the big benefits of using some sort of accounting software.

How do you do data entry and run the financial statements?

After you know what you actually need, the next step has two parts. First, you need to know how to do basic data entry within Quickbooks. Second, you need to know how to run the financial statements and review them.

At this point in the process, you may be trying to make heads or tails of the financial statement. In many cases, the whole reason you’re preparing them is so you can send the statements to a tax preparer or a lender. Quickbooks does have the option to export and send reports. In those cases, the tax preparer or lender will know how to read the reports.

But if you’re looking at the statements yourself, a key to reviewing them is looking for a few things:

  • Negative numbers where they’re shouldn’t be negative numbers
  • Big balances where there shouldn’t be any balances at all
  • Any value that looks different than you thought it would

How do you make it look nice?

Finally, while making a report look nice isn’t most of the work we do when preparing financial statements, it is an important part of creating a good financial report. An evenly spaced, regimented, organized financial report is more aesthetically pleasing to look at and easier to review.

A simple setup for your chart of accounts will usually solve the problems of odd spacing and weird indentions.

And there you have it! Naturally, this is only a quick overview of preparing financial statements with QuickBooks. If it feels too overwhelming, we would be happy to talk and see if we can help.

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