Unapplied cash payment income on your profit and loss

When running a Profit and Loss report using the cash method, you might see an account called Unapplied cash payment income. This account is created by QuickBooks for proper tax reporting.

With QuickBooks Online Advanced, you can create your own reports using Custom Report Builder.

Unapplied cash payment income may appear on your report if:

• A customer prepaid you and you recorded the payment before creating the sales form (invoice or sales receipt).
• You entered payments without matching them to sales forms.

How to resolve Unapplied Cash Payment Income

Follow these steps to find and apply outstanding customer payments to the correct sales forms.

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Step 1: Find unapplied cash payments on the Open Invoices report

Follow this link to complete the steps in product

1. In the Find report by name field, enter Open Invoices.
2. Set the report period, then select Run report.
3. In the Transaction Type column, locate any transaction listed as a Payment.
4. Check if that Payment transaction has a matching open invoice listed on the report.
   • If a matching invoice exists: Continue to Step 2.
   • If a matching invoice doesn't exist: Skip to Step 3.

Step 2: If the Payment transaction matches an open invoice

If that payment matches an open invoice, follow these steps.

1. Select the Payment date to open the transaction.
2. Under Outstanding Transactions, check the box for the correct open invoice.
3. Select Save and close.
4. Check your Open Invoices report to see if there are any more transactions listed as a Payment.
5. If there are, repeat these steps for each one.

Step 3: If the Payment transaction doesn’t match an open invoice

If the payment doesn’t match an open invoice, you’ll need to create the transaction. Follow these steps: 

Create the invoice

1. Select + Create.
2. Select Invoice.
3. Fill out the form with the same customer, amount, and date as the unapplied payment.
4. Select Save and close.

Apply the payment to the new invoice

1. Go back to the Open Invoices report.
2. Find the unapplied payment and select its date to open it.
3. Under Outstanding Transactions, check the box for the invoice you just created.
4. Select Save and close.

Now run your Profit and Loss report again. You should no longer see the Unapplied cash payment income. 

Step 4: Check your Profit and Loss report

After applying all unapplied payments, run your Profit and Loss report again. The Unapplied cash payment income account should no longer be on the report.