QBO Profit and Loss report

I'll share some insights about the Profit and Loss report amounts in QuickBooks Online (QBO), @rkoorapati.

QBO calculates the amounts in the Profit and Loss report based on the transactions entered. The program doesn't have a specific formula to determine the total profit of your company. To verify what causes the difference between the report in your Excel and with QBO, I recommend reviewing each line in the Profit and Loss report in that particular month. 

You can also reach out to your accountant to further check the transactions entered in the Profit and Loss report in your QBO and Excel. Then, guide you to have a correct formula you can use to get the accurate amounts. 

In case you need to modify the details of your report in QBO, you can refer to this article: Customize reports in QuickBooks Online.

Should you encounter any difficulties while running other reports in QuickBooks, feel free to reach out to me again. Resolving your issue is my top priority.

@rkoorapati 

Profit (or presumably you are referring to net income) is made up of only items of income and expense.  The expenses, checks, and bills functions in QB can include assets, liabilities, and equity accounts which affect your balance sheet, not your P&L.  For example, if you use the expense function to record the purchase of inventory, that "expense" is not an expense at all, it is a reduction of cash and an increase in inventory - both balance sheet accounts.  So, if you were to assume that "expense" is, in fact, an expense, you would be incorrectly reducing your net income by that amount.       

@DivinaMercy_Nstated: The program doesn't have a specific formula to determine the total profit of your company.

Yikes, does anyone screen these answers?  QB certainly does have a formula to determine it.  If it didn't, how would it calculate it?  A random guess?  A dart throw?  QB calculates net income by taking items of income and subtracting items of expense.  That's it.  Nothing crazy going on. 

Yes, it should be simple math. Income minus expenses. What I did was, exported QBO transaction list by date for a specific month and group transaction type items by Invoice, expense, Bill, Check. And then did the math, invoice total minus ( expense+bill+check) total. I did hope this should be close to what QBO P& L report shows. But P&L report shows a higher net income than my excel which was based on QBO transaction list report. Confusing !!!

Yes, I am going thru each line item to figure out how QBO P&L report is calculated.

Thanks 

Hello,

Any idea how bills are calculated in QBO P&L report ?

Thanks 

I mean purchase order bills. I see those PO bills are not included in Profit & Loss reports. Are they considered as an asset from P&L report perspective ? Can anyone confirm ?

Thanks 

Hi rkoorapati,

I'm here to share when the purchase order affects the profit and loss report.

Purchase orders typically do not directly impact the profit and loss report in QuickBooks Online.

Once a purchase order is fulfilled and the goods or services are received, you can create a bill or an expense transaction to record the actual cost. It is at this point that the purchase order indirectly affects the profit and loss report. The bill or expense transaction will be categorized under the appropriate expense account, and the amount will be reflected in the profit and loss report as an expense.

Furthermore, I've added this article on how you can record a bill from the purchase order: Add purchase orders to expenses, bills, or checks in QuickBooks Online.

You can always post in the forum whenever you have concerns about managing your transactions.

Hi, Rainflurry.

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

Stay safe and have a great rest of the day.