number checker
I recently reviewed a file for a small business who had been operating about 8 months. They had set-up their own QuickBooks and were 'learning' as they went. Along with a number of other items, I found three irregular observances that point out some of the things you should be looking at as you undertake year end reviews of files.
Income (P&L) Statement Income ≠ (does not equal) Sales By Item.
If Total Income per the Income (P&L) Statement does not agree with Sales by Item, the likely causes are: 1. Total Income includes reductions for Discount Given, Sales Returns & Allowances, etc., that do not show up on the Sales by Item report. 2. Sales by Items include transactions that do not involve accounts comprising Total Income but, instead, are charged or credited to other accounts such as Retainers Received, Other Income, Cash in Checking (for NSF checks re-billed), etc. 3. Bank deposits affecting the Income Accounts that were not first run through Invoices or Sales Receipts, and thus do not get associated with Items. 4. Credit memos issued to customers that are associated with Income (P&L) Statement accounts other than those comprising Total Income.
Actual Revenue ≠ (does not equal) Total Income
If Actual Revenue per the QuickBooks Job Profitability Report does not equal the Total Revenue per the company’s Income (P&L) Statement you may, or may not, have an actual problem. The QuickBooks user may not wish to track all revenue by jobs, in such cases consider creating a job entitled "Other Non-trackable Jobs" for revenues that are not being assigned to a specific job. By NOT creating such a job, it isn't possible to know whether the failure to assign revenue-related transactions to a job was intentional or unintentional. On the other hand, in cases where unassigned revenue transactions represent actual errors, they most likely result from customer revenues not being assigned to jobs.
Payroll Expenses on the Income (P&L) Statement ≠ Total Payroll Expenses from Payroll and Payroll-related Transactions
You may find the total of all payroll and payroll-related transactions does not match Payroll Expense Accounts on the Income (P&L) Statement, or that the total payroll expense transactions reflected on QuickBooks Payroll Reports, do not match the total Payroll Expense accounts on the Income (P&L) Statement. These differences can most likely be resolved thorough review of all payroll and payroll-related transactions including all non-payroll-check and non-payroll-liability-check transactions charged to payroll expense accounts. These transactions might include minor payroll tax adjustments and payroll processing fees charged by a payroll service. Non-payroll/payroll-related-check charges to Payroll Expenses should be reviewed for appropriateness. If the discrepancies are not fully accounted for by these transactions, there can also be errors in payroll item(s) setup.
If you have observed other similar oddities, please tell us about them by posting your comments to this article.