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COLE_TR
Level 1

Allocating expenses and payments to get a more accurate P&L

Hi,

 

We want to find a way in QB to easily improve our P&L reporting. We get a lot of payments in a single month that we want allocate across the year. We also want to do the same with expenses. We can can use journals, but that is quite complicated.

 

Any assistance would be greatly appreciated.

 

Kind regards


Trevor

Solved
Best answer June 21, 2021

Accepted Solutions
EmmaM
QuickBooks Team

Allocating expenses and payments to get a more accurate P&L

Hi Cole, if you have an accrual method for your accounting as soon as you create the invoice/bill it will record it as income/expense on the p and l. What you could do is record the bulk amount received as an asset for example for the full amount(by creating an asset for the full amount)and then reduce the asset over 12 months by creating a recurring invoice over that period for the amount each month's installment would be and using part of the asset to pay for it. It may be worth speaking to an accountant to discuss whether they are happy for you to account for it in this way as it would impact the balance sheet.

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5 REPLIES 5
EmmaM
QuickBooks Team

Allocating expenses and payments to get a more accurate P&L

Hello COLE_TR, Are you on cash or accrual as your accounting method? Are you creating invoices or bills for these income/expenses as a bulk amount? The other option may be setting up recurring transactions we just need a little more information

COLE_TR
Level 1

Allocating expenses and payments to get a more accurate P&L

Emma, thank you for getting back to me. We have accrual account I think, how do I check?  I am not sure what you mean by creating invoices or bills for these income/expenses as a bulk amount? 

 

Basically we have expenses like insurance that is a large amount in one go. We wish to allocate that across 12 months.  We invoice our clients for software. That is a large about for a year and we want to allocate that across the months. So the income is split monthly.

 

Kind regards

 

Trevor

RCV
QuickBooks Team
QuickBooks Team

Allocating expenses and payments to get a more accurate P&L

Thanks for coming back, COLE_TR.

 

We can check the Accounting method you are using in the Account and Settings page. Let me show you how:

  1. Go to the Gear icon on the top menu.
  2. Choose Account and settings.
  3. Click Advanced.
  4. In the Accounting section, select the Accounting method.
  5. Press Done.

To learn ore about accounting method, check out these articles:

 

For creating invoices or bills for these income/expenses as a bulk amount, Emma is referring to creating a lump sump amount on those transactions. Since you mentioned, you got a got of payments you need to allocate for the year, just create a sales receipt monthly for the 12 months. 

 

On the other hand, you can create expenses or cheques per month (with the dates) if it is on the spot. If not, create bills and pay bills in monthly period. Also, the Account Payable and Account Receivable will not show in the Profit and Loss report. You may consult your account for the accurate reporting for the Profit and Loss report and your records.

 

Feel free to visit our Reports page for more insights about running and managing reports in QuickBooks.

 

You can always update us on the result after trying the steps in the comment below. I'd like to ensure this is resolved for you. You have a good one. 

COLE_TR
Level 1

Allocating expenses and payments to get a more accurate P&L

Hi, we are accounting on an accrual basis.

 

I am not sure how sales receipts will work, as we raised an invoice. It is just that we raise an invoice for a software licence for the year and we want to spread this out over the year to flatten this income out, rather than it being in one month.  We wan to do the same for expenses. If we get a big bill for insurance for the year, we want to spread this cost monthly. Kind regards Trevor

 

EmmaM
QuickBooks Team

Allocating expenses and payments to get a more accurate P&L

Hi Cole, if you have an accrual method for your accounting as soon as you create the invoice/bill it will record it as income/expense on the p and l. What you could do is record the bulk amount received as an asset for example for the full amount(by creating an asset for the full amount)and then reduce the asset over 12 months by creating a recurring invoice over that period for the amount each month's installment would be and using part of the asset to pay for it. It may be worth speaking to an accountant to discuss whether they are happy for you to account for it in this way as it would impact the balance sheet.

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