How Do You Know If Your QuickBooks Financial Statements Are Correct?
Before sending your Profit & Loss and/or Balance Sheet reports from QuickBooks to your tax preparer or before you file your taxes yourself, you may want to continue reading.
There are several litmus tests to confirm that what is in your QuickBooks is correct and that your financial statements reflect this.
If you invoice (use Accounts Receivable) your customers out of QuickBooks, then you may want to make sure that the Total Income on your Profit & Loss report on an accrual basis matches your Sales by Customer Summary report.
Sales (Income) should be reflected with transactions only such as invoices, sales receipts, credit memos, and refund receipts (QuickBooks Online only), not using deposits to income or journal entries. To find out where the discrepancy lies, run a profit and loss report by customer or job and compare with the sales by customer summary report totals for each.
Fortunately, QuickBooks Online includes a Not Specified column to make this easier to find.
The culprit: 2 transactions, expenses, that were coded to income accounts.
This is another scenario in Quickbooks Desktop.
In comparing the reports, we find that the dollar amount discrepancy shows up for a Cost of Goods Sold account. Upon further drilling down, an invoice was used, but the item was not set up with an income account.
Once the item is fixed to either an income account or as two-sided (check box above Description checked), this fixes the reports and financial statements.
In my next post, I will show another test, so please subscribe below to get notifications to my blog. Thanks!
