Why this matters
Maya (made up) runs a small dog-walking business and has outgrown her spreadsheet. Her accountant wants the books in accounting software, with every transaction categorized each week, so a Profit and Loss and a Balance Sheet can be pulled at any time. She wants something free to start with.
Wave’s free Starter plan does that. In this module you find the chart of accounts, record a $64.20 office-supplies purchase with the right category, and see it land in the Profit & Loss and on the Balance Sheet, all on real Wave screens.
What you’ll build
One categorized transaction in Wave (a $64.20 withdrawal for printer paper, filed under Office Supplies) and the two reports that show it: an operating expense on the Profit & Loss and less cash on the Balance Sheet.
You will also know which Wave features need the paid Pro plan, such as automatic bank imports.
What you need
- Nothing to start the practiceThe practice is built from real Wave screens and does not touch any account.
- A free Wave account, to do it for realSign up at waveapps.com and set up a practice business first, so you never test on real books.
Concepts
3 ideas you’ll use in the practice.
The chart of accounts is your list of buckets
Wave keeps it under Accounting › Chart of Accounts, on five tabs: Assets, Liabilities & Credit Cards, Income, Expenses and Equity, the groups of the accounting equation.
A new business starts with about 30 expense accounts, each with a plain-English description. Add your own with Add a New Account.
Every transaction needs a category
On the free plan, transactions come in by hand or as an uploaded bank CSV; automatic bank import is Pro. Money out is a Withdrawal, money in is a Deposit.
The category says what it was for. Anything left as Uncategorized Expense or Uncategorized Income makes the reports wrong. Behind the scenes Wave writes the debit and the credit for you.
Two reports, one purchase
The Profit & Loss shows income minus expenses for a period; Report Type switches between Accrual (paid and unpaid) and Cash Basis (paid only).
The Balance Sheet shows what the business owns and owes on a date. The same $64.20 appears there as less cash in Cash and Bank.
Practice
Do every step yourself in a practice copy of the real tool. It checks your work, and “Do it for me” finishes any step you get stuck on.
Do it for real
Now repeat it in your own account. Tick each step as you go.
Quick check
3 questions to check you’ve got it.
1. Where is the chart of accounts in Wave?
- Reports › Balance Sheet
- Accounting › Chart of Accounts
- Sales & Payments › Customers
Show the answer
Accounting › Chart of Accounts. Wave keeps it under Accounting, split into Assets, Liabilities & Credit Cards, Income, Expenses and Equity tabs.
2. You paid $64.20 for printer paper. Which Type and Category do you choose?
- Deposit, Office Supplies
- Withdrawal, Uncategorized Income
- Withdrawal, Office Supplies
Show the answer
Withdrawal, Office Supplies. Money leaving the business is a withdrawal, and the category says what it was for.
3. Which Wave plan imports bank transactions automatically?
- Pro
- Starter
- Neither; it always needs a CSV
Show the answer
Pro. On the free Starter plan you add transactions by hand or upload a CSV statement; automatic imports are a Pro feature.
Wave: Create an Invoice and Record the Payment
Your books have a categorized transaction. Next: invoice a customer, record the payment against the invoice so income is counted once, and check who still owes you.
Start module 2 →