balance sheet amoounts are appearing on cash-based P&L reports. Is anyone else running into this? Desktop Enterprise.

sunshine 42 · ‎February 15, 2024

I have a situation where a client's balance sheet amoounts (FUTA, WC payable, etc) are appearing on cash-based P&L reports. The liabilities are not yet paid, but the accrued amounts appear as an expense in the P&L. Is anyone else running into this? Desktop Enterprise.

I downloaded entire update, downloaded payroll updates, ran program in administrator mode and restarted computer and QB. I am stumped.

BigRedConsulting · ‎February 15, 2024

Generally, cash basis reports include all transactions that are not AR or AP transactions on the date of the transactions - and AR and AP transactions on the dates(s) they are paid.

No balance sheet amounts appear on the P&L, ever.

What you're seeing are the company expenses associated with the company liabilities created when recording paychecks, which are cash basis events are they are recorded in your bank account.

It is correct to recognize the expense for the liabilities as of the payroll date because among other things, remitting those liabilities to the government is not optional and because payroll is a regularly-recurring event.

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BigRedConsulting · ‎February 15, 2024

Generally, cash basis reports include all transactions that are not AR or AP transactions on the date of the transactions - and AR and AP transactions on the dates(s) they are paid.

No balance sheet amounts appear on the P&L, ever.

What you're seeing are the company expenses associated with the company liabilities created when recording paychecks, which are cash basis events are they are recorded in your bank account.

It is correct to recognize the expense for the liabilities as of the payroll date because among other things, remitting those liabilities to the government is not optional and because payroll is a regularly-recurring event.

sunshine 42 · ‎February 16, 2024

Thank you for your respopnse. In my 25 years of working with BS and P&L reports with cash-based clients, I have yet to see accrued liabilities - to include payroll liabilities, appear on a P&L. I wouldn't post this concern if this was or has been a regular occurance. Historically, the company portion of liabilities that are paid appear on the reports after being paid, not before. This is something I have never seen.

BigRedConsulting · ‎February 16, 2024

I've never seen that. I've always seen the expenses that are a result of company paid liabilities appear on the paycheck date - which is how it should work.

Also, the liabilities will appear on the balance sheet on the same date.

More generally, all activity in all accounts will appear on these cash basis reports on the posting date/the transaction date - except for A/R and A/P transactions. Only A/R and A/P are treated in a special way - where the financial activity is reported - based on the payments applied to the 'source' transactions like Invoices and Bills.

You'll see the same in any of the QuickBooks sample companies.

sunshine 42 · ‎February 16, 2024

okay

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balance sheet amoounts are appearing on cash-based P&L reports. Is anyone else running into this? Desktop Enterprise.