Why is depreciation of a tangible asset showing up as a debit against sales?

chris-l · ‎January 31, 2021

I have a tangible asset whose value is tracked in a dedicated 'Tangible Asset' category account. I have a dedicated depreciation account for that asset under 'Other Expenses' category. I have a recurring monthly journal entry to move value from the asset to the expense account. It all works fine. However, on the dashboard of QBO, and in all the standard sales reports, the depreciation of the asset shows up as a negative 'Not specified' sale entry - ie. reducing my running sales value. Is this correct?

ReyJohn_D · ‎January 31, 2021

Let's get the correct gross sales show up on your report, @chris-l.

I've read your initial post and you've mentioned that there some "Not specified" sales entries on your Sales by Product/Service Detail report. A transaction falls under the Not Specified group when it's not set up into a particular filter you've chosen in the Group by drop-down menu.

You'll want to open each transaction or journal entry you've created. Then, make sure to choose the customer, class, etc.

After that, please ensure to select the correct Report period and Accounting method when running the said report. This way, you'll see the sales information you want to see.

Also, the Sales widget or graph is a summary of your sales for a specific period (invoices and receipts). This won't include journal entries and hence won't affect the data on it.

By the way, you can customize your reports further to get personalized details. Then, you can memorize them to save copies for future use.

Stay in touch with me if you need more insights about handling your transactions or reports. I'm here to assist you anytime.

View solution in original post

AlcaeusF · ‎January 31, 2021

Hi @Chris-gmyz-com,

Thank you for posting here in the Community. Let me share some information about asset depreciation in QuickBooks Online.

When entering a journal entry for the depreciation, crediting the asset account will decrease the value, and debiting expense increases the amount. Since the depreciation reflects as expenses, it will affect your net income too.

If you think the results are unusual, you can also seek expert advice from an account. Calculating asset depreciation is complicated, and they'll be able to check this one on your behalf.

For additional reference, you can use the following article to know more about the asset account type: Set up an asset account in QuickBooks Online.

Also, I encourage you to share more details about the specific sales reports you're referring to in QuickBooks. Any screenshots you can provide will help us check the concern further.

Please let me know if you need anything else about the depreciation. The Community and I will be here to help you.

chris-l · ‎January 31, 2021

Thanks for your reply, AlcaeusF

However, the problem is not with net revenue but with gross sales, as shown on standard Sales reports such as "Sales by Product/Service Detail Report", where the depreciation of the asset shows up, but no other expenses categories do. I have many other expenses which would reduce accrued sales to net revenue, but these do not show in this report, or negatively impact the Sales widget on the dashboard. Here is a redacted screenshot to help explain.

ReyJohn_D · ‎January 31, 2021

Let's get the correct gross sales show up on your report, @chris-l.

I've read your initial post and you've mentioned that there some "Not specified" sales entries on your Sales by Product/Service Detail report. A transaction falls under the Not Specified group when it's not set up into a particular filter you've chosen in the Group by drop-down menu.

You'll want to open each transaction or journal entry you've created. Then, make sure to choose the customer, class, etc.

After that, please ensure to select the correct Report period and Accounting method when running the said report. This way, you'll see the sales information you want to see.

Also, the Sales widget or graph is a summary of your sales for a specific period (invoices and receipts). This won't include journal entries and hence won't affect the data on it.

By the way, you can customize your reports further to get personalized details. Then, you can memorize them to save copies for future use.

Stay in touch with me if you need more insights about handling your transactions or reports. I'm here to assist you anytime.

Topics

Training

Community

Resources

Why is depreciation of a tangible asset showing up as a debit against sales?