Bookkeeping Basics

with QuickBooks Online

by: Ivy Donque
Learn QBO even without any Accounting background!
 Is Bookkeeping Right for You?
If you are wondering whether bookkeeping is the right career for
you, here are the needed skills and attributes:
Keen interest in administrative and clerical tasks
Comfortable with numbers and other complex skills like
calculators, record keeping, etc
High attention to detail and data entry skills
Proficiency of accounting software to record and analyze
financial data - QuickBooks Online, Xero, Spreadsheet, etc.
Basic accounting and bookkeeping knowledge such as bank
reconciliation, debits, credits, A/R and A/P, basic financial
statements, etc.
People and interpersonal skills - ability to work with others,
problem-solving, correcting errors, supervising, etc.
Ability to manage financial transactions and flow of cash
including payments, billings, invoicing, customer relations etc.
Capability to maintain confidentiality and thoroughness
Hi, I’m Ivy. I’m glad you’re here!
I’ve been a virtual assistant/freelancer for over 3
years. It’s not for everyone but if you have the grit and
the dedication, nothing is impossible.
 If you are serious about becoming a
Bookkeeper, congratulations for taking
the first step!

Disclaimer: This guide is based on my own journey. I have poured

my time and effort in creating this resources for those who are
willing to learn a new skill - Bookkeeping.

Please do not sell or reproduce this material. Thank you!

 Module 1
L1: What is bookkeeping?
Bookkeeping is like keeping a detailed diary of Basic Terms You Need to Know:
all the money that comes into and goes out of Assets: Things that a business owns that
a business. Every time a business earns or are worth money, like cash, equipment, or
spends money, it gets written down, or inventory.
"recorded”. Liabilities: Money that the business owes
to others, like loans or unpaid bills.
Why is Bookkeeping important? Income: Money the business earns from
Tracks Finances: It helps you know where selling goods or services.
every dollar comes from and where it goes. Expenses: Money the business spends, like
This helps you make smart money rent, electricity, or buying supplies.
decisions.
Stays Organized: Businesses need Example: Imagine you have a lemonade stand. The
bookkeeping to stay organized and avoid cash you have from selling lemonade is an asset, but if
mistakes when it’s time to pay bills or do you owe your friend $5 for lemons, that’s a liability.
The money you get from selling lemonade is your
taxes.
income, and the money you spend on lemons and
Required by Law: Most businesses must sugar is your expense.
keep accurate records of their finances to
file their taxes properly.
 L2: The Roles of a Bookkeeper
Recording Transactions: A bookkeeper keeps track of all the financial transactions in a business, making sure everything is
recorded accurately and on time.
Organizing Information: They organize this information so it can be easily accessed and understood. This might include
filing receipts, entering data into a computer system, and keeping records up to date.
Producing Reports: Bookkeepers often create reports that show how the business is doing financially. These reports help
business owners and managers understand where the money is coming from and where it's going.
Helping with Taxes: Bookkeepers make sure that all financial records are ready when it's time to do taxes. They organize
the information so that it’s easy to report income, expenses, and other financial details to the government.

Why Every Business Needs a Good Bookkeeper:

Accuracy: Accurate bookkeeping ensures that all financial information is correct, which is crucial for making decisions and
filing taxes.
Accountability: A bookkeeper helps keep the business accountable by making sure that all financial transactions are
recorded and that nothing is missed.
Financial Health: By keeping track of all the money going in and out, a bookkeeper helps the business stay financially
healthy, avoiding problems like running out of cash or getting into too much debt.

Example:
Think of a bookkeeper like the scorekeeper in a sports game. Just like a scorekeeper keeps track of every point
scored, a bookkeeper keeps track of every dollar earned or spent. Without a scorekeeper, you wouldn’t know who’s
winning the game. Without a bookkeeper, a business wouldn’t know how well it’s doing financially.
 L2: Types of Financial Transactions
Income / Sales Expenses / Purchases Assets Liabilities
Money your Costs of running the What your business What your business
business earns from business, like buying owns, like cash, owes, like loans or
selling products or supplies or paying inventory, or unpaid bills.
services. rent. equipment.
Selling a lemonade is Buying lemons and The cash register is Owing money to your
income. sugar is an expense. an asset. friend for lemons is a
liability.

Equity Accounts Receivable (A/R) Accounts Payable (A/P) Depreciation

Represents the owner’s share Money owed to the business Money the business owes to Process of spreading out the
or interest in the business. It’s by customers for goods or suppliers or vendors for cost of a long-term asset
the value left after services already delivered. It goods or services received (equipment or machinery)
subtracting liabilities from represents future cash but not yet paid for. It over its useful life. This
assets. inflows. represents future cash reduces the value of the
Investment and Draw outflows. asset over time on your
If you sell lemonade on credit
and a customer promises to
If you buy lemons from a financial records.
supplier and promise to pay
pay you next week, this amount
them in 30 days, this is
is recorded as A/R
recorded as A/P
 Module 2
L1: Introduction to QBO L2: The QBO Dashboard
What is QuickBooks Online?
The dashboard is where you’ll see an overview of
QBO is a tool that helps businesses keep track of
your business’s finances, including income,
their money. It’s an easy way to record income,
expenses, and bank balances.
expenses, and more, all in one place.
Understanding Menus, Settings, and Icons:
Why Use QuickBooks Online? Menus: Located on the left side, these let you
Saves Time: QBO helps save time by access key features like sales, expenses, and
automating tasks like creating invoices, reports.
tracking sales, and organizing expenses. Settings: This is where you manage your
Easy to Use: Even if you’re not a bookkeeper, company information, tax settings, and more.
QuickBooks Online is simple and user-friendly. Icons: Quick access to common actions like
Accessible Anywhere: Since it’s online, you creating an invoice or adding an expense.
can use it anywhere you have an internet
connection!

(Pls refer to the sample QBO dashboard below)

 Module 3: Tasks and Duties of a Bookkeeper
These tasks are essential for keeping a business’s financial records accurate, up-to-date, and organized. For each task, we’ll walk
through an example, explain why it’s important, and give you step-by-step instructions to complete the task using QuickBooks
Online (QBO).

Lesson 1: Recording Income and Sales (How to Create and Send Invoices)

What’s an Invoice?
An invoice is a bill that you send to your customer to request payment for products or services you provided.

Steps to Create an Invoice in QuickBooks Online:

Example: Let’s say you’re a virtual 1. Log in to QuickBooks Online.

bookkeeper for a landscaping 2. Go to “Sales” from the left-hand menu.
company(ABC company), and 3. Click “Invoices.”
4. Select “Create Invoice.”
you need to send an invoice for
5. Fill in the Customer Information.
bookkeeping services you
6. In this example, enter the landscaping company’s details.
provided in August for $500 7. Enter the Service Provided: “Bookkeeping services for July 2024.”
exclusive of 12% tax. 8. Enter the Amount. In this case, $500.
9. Save and Send the invoice directly to your customer’s email.
(Please refer to the sample
invoice below.) Once you’ve sent the invoice, the customer receives it and can pay you by the due date.
 Lesson 2: Recording Expenses and Purchases

Entering Bills and Expenses:

1. Go to the “Expenses” section.

2. Click “New Transaction” found on the top right hand side. Then choose “Expense”
3. Enter the details of any bill or expense, such as the amount spent, the vendor’s name, and what the expense
was for, and tax. If there’s a receipt, most of the details should be found in it.
Example:
If you buy 2kg of lemons for your lemonade stand for Php 80 per kilogram,
record that as an expense so you can see how much money you’re spending.
 Lesson 3: Categorizing Transactions

Categorizing transactions in QuickBooks Online (QBO) is an essential part of bookkeeping. When you correctly
categorize income and expenses, it helps generate accurate financial reports, which give a clear picture of the
business’s financial health.

Here’s a step-by-step guide to categorizing transactions in QBO:

Step 1: Log In to Your QuickBooks Online Account
Open your web browser and go to the QuickBooks Online website.
Enter your username and password, and click Sign In.

Step 2: Access the Transactions Menu

Once logged in, go to the left-hand navigation bar.
Click on “Transactions”
Step 3: Review Downloaded Transactions
Under the “Bank Transactions” tab, you’ll see a list of transactions downloaded from your bank.
These transactions are uncategorized and need to be reviewed and placed in the right categories.

Step 4: Choose a Transaction to Categorize

Look through the list of uncategorized
transactions. Select a specific transaction
that you want to categorize.
Click on the transaction line to open the
details.
Step 5: Select the Correct Category
Once the transaction details are open, follow these steps:
Look for the “Category” Dropdown Menu: This is where you will assign the transaction to a specific expense or
income category.
Select the Category:

You may have categories such as:

Utilities (for bills like electricity or internet)
Travel Expenses (for travel-related costs)
Advertising and Marketing (for promotional expenses)
Sales Income (for income from sales of goods or services
Step 6: Add Additional Information (Optional)
If you want to add more details to the transaction, you can:
Add a Description: Explain the transaction in more detail. For example, “Purchased printer ink and paper for
office use.”
Add a Customer or Project: If the expense relates to a specific client or project, you can tag it here.
Class and Location (Optional):
If your business tracks income or expenses by class (e.g., different departments) or location (e.g., different store
branches), you can assign the transaction to the correct class or location.
After selecting the correct category and filling in any extra details, click “Add” or “Save” to confirm the
categorization.
Once saved, this transaction will move from the “For Review” tab to the “Categorized” tab, meaning it has been
properly accounted for in your books.
 Lesson 4: Bank Reconciliation

What is Bank Reconciliation?

Bank reconciliation is the process of comparing your company’s financial records in QuickBooks to your
bank statement. It ensures that all transactions match and nothing is missing.

Why is This Important?

Bank reconciliation helps you spot mistakes, missing transactions, or incorrect amounts in your records.

Imagine you have a piggy bank. Every time you put money in or take money out, you keep a record in a
notebook. At the end of the month, you count the actual cash in the piggy bank to see if it matches what
your notebook says. If it doesn’t, something is wrong. Either you forgot to write something down or you
made a mistake while counting.

Reconciling works the same way, but instead of a piggy bank, it’s your business bank account. The
"notebook" is your bookkeeping records, like QuickBooks. The goal is to match what’s in QuickBooks with
what the bank says you actually have.
Steps to Reconcile Your Bank Account in QuickBooks Online:

1. Log in to QuickBooks Online.

2. Go to “Transactions” on the left-hand side and select “Reconcile.”
3. Choose the Bank Account you want to reconcile.
4. Enter the Ending Balance and Ending Date from your bank statement .
5. QuickBooks will show a list of all your recorded transactions.
6. Match each transaction in QuickBooks to those on your bank statement.
7. If any transactions are missing or incorrect, add or correct them.
8. Once everything matches, click “Finish Now.”

You’ve successfully reconciled your account, and your records are now accurate!
This is a sample transaction details only. You may use your bank statements or spreadsheet (if applicable).

NOTE:
The main goal of reconciling
transactions is to make sure that
the records in QuickBooks (or any
bookkeeping system) match
exactly with what your bank or
credit card statements show. This
process ensures that all the
transactions are accurate and that
nothing is missing or incorrect.
 How to Make Sure Your Reconciliation Works:
1. Collect the Information: First, you gather your bank or credit card statement. This is a list of all the
transactions (deposits, payments, withdrawals) that happened in your account over a certain period of time,
usually a month.

2. Match the Transactions: In QuickBooks, you’ll see a list of all the transactions you recorded for that same
period. Now, your job is to go through each one and make sure that every transaction in QuickBooks is also on
the bank statement, and vice versa.
Example: If you paid Php 2,700 for an internet bill and it shows up on your bank statement, you’ll look for
that same Php 2,700 internet bill entry in QuickBooks.

3. Check for Differences: If everything matches, great! But if there’s a difference, you need to figure out why.
Sometimes, it might be because of:
Missed entries: Maybe you forgot to record a transaction in QuickBooks.
Mistakes: Maybe you recorded an amount incorrectly.
Bank fees or interest: Sometimes, the bank will charge fees or add interest that you didn’t know about.

4. Fix Any Issues: If there are any mistakes or missing entries, you’ll need to correct them. Once everything is
fixed, your QuickBooks balance should match your bank statement.
Why Does Bank Reconciliation Matter?
1. Catch Mistakes Early: Reconciling helps you catch errors early. For example, if you accidentally
recorded Php 3,500 instead of Php 3,050 for a bill, reconciling will alert you to the mistake before it
becomes a bigger issue.
2. Prevent Fraud: It also helps detect fraud or unauthorized transactions. If you see a charge on your bank
statement that you didn’t make or record in QuickBooks, you can catch it right away and report it.
3. Accurate Financial Reports: When you reconcile, your financial reports (like Profit & Loss or Balance
Sheet) are more accurate. This helps you see the real picture of how your business is doing, which is
essential for making good business decisions.
4. Smooth Tax Filing: Reconciling regularly also helps when it’s time to file taxes. If your records are
correct and match your bank, filing taxes becomes easier and less stressful.

Real-Life Example:
Let’s say you run a landscaping business. At the end of September, you look at your bank statement and it
shows that you spent Php 1,800 on electricity, Php 3,920 on groceries, and Php 2,700 on an internet bill.
You then open QuickBooks to reconcile these transactions. You find that all the amounts match the bank
statement, except that QuickBooks recorded the internet bill as Php 2,500 instead of Php 2,700.
Reconciling helps you catch this mistake and correct it, so your records are accurate.
Once the process is complete, you know that your books are correct and up to date. Now, you can
confidently say that the money in your bank matches what you have in QuickBooks.
 Lesson 5: What are Profit & Loss and Balance Sheet Reports

Profit & Loss Report (P&L): Balance Sheet Report:

The Profit & Loss report (sometimes called an "Income The Balance Sheet shows a snapshot of your
Statement") shows how much money your business business’s financial position at a specific point in time
earned and how much it spent over a certain period (like (like on a particular day).
a month, quarter, or year). Why Is It Important?
Why Is It Important? It shows what your business owns (assets), what it
It helps you understand if your business is making a profit owes (liabilities), and the difference between the two
(earning more than it spends) or a loss (spending more (equity).
than it earns). Example:
Example: If you run the lemonade stand, you might have a small
Imagine you run a small lemonade stand. Over the last freezer (an asset worth Php 3,000), but you also owe Php
month, you earned Php 5,000 selling lemonade, but you 1,000 to your supplier for lemons (a liability). Your equity
spent Php 3,000 on lemons, sugar, and cups. Your Profit is is Php 2,000 (assets – liabilities).
Php 2,000. The P&L report will show this summary. What it shows:
What it shows: Assets: What your business owns (like
Income (Revenue): The money your business earns equipment, cash, or inventory).
(like sales from customers). Liabilities: What your business owes (like loans or
Expenses: The money your business spends (like bills).
supplies, rent, or utilities). Equity: The difference between assets and
Net Profit (or Loss): The difference between income liabilities. This represents the owner's stake in
and expenses. (Income – Expenses = Profit/Loss) the business.
 How to Generate Reports in QuickBooks Online (QBO)

1. From the menu, click on “Reports”.

This section gives you access to different types of financial reports, including the Profit & Loss and Balance Sheet.

2. Choose the Type of Report:

Under the Reports tab, you'll find many report options. To create a Profit & Loss report, look for the “Profit &
Loss” option under the “Favorites” or “Business Overview” section.

To create a Balance Sheet report, find the “Balance Sheet” option in the same area.

3. Select the Time Period:

Once you click on a report, QuickBooks will ask you to select a time period.
For example, you can choose to generate the report for “Last Month,” “This Year,” or any custom date range you
need.

Example: If you want to see how your lemonade stand performed from January to March, you would select those
dates.
4. Click "Run Report":
After selecting your dates, click "Run Report". QuickBooks will generate the report, showing your business's
income, expenses, and profit or loss (for the P&L) or assets and liabilities (for the Balance Sheet).
 Bonus Topics
Lesson 1 : Understanding Journal Entries
A journal entry is a record of a financial transaction in your bookkeeping system. It shows where money is coming
from and where it is going. In QuickBooks Online (QBO), every financial transaction (like a sale, an expense, or a loan
payment) is recorded in at least two accounts: one account is debited (money going in) and the other account is
credited (money going out). This process is known as double-entry bookkeeping.

When to Use Journal Entries in Bookkeeping?

Journal entries are mainly used in special cases when transactions cannot be automatically recorded through regular
forms in QBO, like invoices or bills. Here are common situations where you might use journal entries:
1. Adjustments: When you need to fix an error in your books or adjust balances, like correcting an overcharged
expense or adjusting inventory levels.
2. Recording Depreciation: If your business owns long-term assets (like equipment or a vehicle), you'll need to record
depreciation (the loss of value over time). Journal entries help to track this loss.
3. Allocating Income or Expenses: If income or expenses need to be split between different accounts or departments,
a journal entry helps allocate them properly.

Example:
You bought a car for 30,000. You paid 10,000 as downpayment and put 20,000 on a car loan
 When you purchase a car for your business, you’ll record the transaction as a journal entry in QuickBooks
Online (QBO). In this case, you’ve paid Php 10,000 as a down payment and taken out a loan for the
remaining Php 20,000. The total cost of the car is Php 30,000.

Remember this magic formula: A= L + S E Dividend = DR

Expenses = DR
Revenue = CR
DR CR DR CR DR CR
A = Assets
L = Liabilities
SE = Shareholder’s Equity

Step-by-Step Process for Journal Entry:

1. Debit (Increase) the Asset Account:

Since you now own the car, it is considered an asset for your business. Assets are things your business
owns and have value.
You will debit the "Vehicle" or "Auto" asset account to show the car's full cost.
Debit the Vehicle Account by Php 30,000.
2. Credit (Decrease) the Cash/Bank Account:
You paid Php 10,000 as a down payment. This amount came out of your cash or bank account.
Credit the Cash or Bank Account by Php 10,000.
 3. Credit (Increase) the Loan Liability Account:
You financed the remaining Php 20,000 through a car loan. This loan is considered a liability because it's
money your business owes to someone else (the lender).
You will need to create a loan account in QuickBooks if you don’t have one. This account will track the
outstanding balance of your loan.
Credit the Loan Payable Account by Php 20,000.

Explanation:
Vehicle (Asset): You are debiting the Vehicle account because the car you purchased is an asset that your business
owns. The value of this asset is Php 30,000.
Cash/Bank: You are crediting the Cash/Bank account by Php 10,000 because you used this money to pay for part of
the car. Your cash is now reduced by this amount.
Loan Payable: You are crediting the Loan Payable account because you borrowed Php 20,000 from the lender. This
amount represents what you owe, and it increases your liability.
Other Useful Resources/Videos I’ve made:

How to create an invoice and apply sales tax

How to categorize a transaction in QBO

Splitting transactions using formula

10 Bookkeeping terms you should master

Understanding Journal Entry

- END-
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Prepared by : Ivy Donque