P&L showing invoices and actual payments as revenue using accrual method

Hey there, @karenjoiner. 

Thanks for reaching out to the Community. 

QuickBooks provides two different approaches to measuring revenue. These approaches are Cash and Accrual basis. 

Cash- Revenue is recorded when a payment is received. 

Accrual- Revenue is recorded when revenue is earned.

 To offer a suggestion for your concern, I recommend running your report in Cash basis. I've included the steps below to run the report in Cash basis. 

1. Open the profit and loss report. 

2. In the upper left corner, click on the Cash toggle. 

That's all there is to it. I'm also including some helpful links that provide information about chart accounts and different ways to record sales transactions. 

• Get started with customer transaction workflows in QuickBooks Desktop
• Understand the chart of accounts in QuickBooks

Let me know if you have further questions or concerns. You can reach out to the Community any time. Have a great rest of your day! 

Thank you for your response. I switched to Cash basis but the P&L report is still showing invoices and deposits as income. I am running the books with accrual basis and am not sure what to do to get it to where only invoices (income earned) is counting toward my monthly revenue. I did notice when I am entering payments it is being recorded as income rather than Accounts Receivable. I tried to change that but received a message stating I am not able to make that change. Could that be what the problem is?

Allow me to step in and provide additional information about the revenue on your P&L report, karenjoiner.

An accrual-basis report shows income regardless of whether all your customers have paid up. And, expenses whether you have paid all your bills.

While a cash-basis report shows income only if you have received it, and expenses if you have paid them.

When you try to change the category, select Yes if this is an option. If not, can you send a screenshot of the exact error you've received? This is for me to know what's exactly is going on when you change the category.

Any changes to your account will affect the balance on your reports and register.

I'll keep this post while waiting for your response. I've added this file: QuickBooks Desktop Mac 2020 User’s Guide as a source for getting to know QuickBooks.

Thank you and stay safe!

Thank you. Perhaps this screenshot can do a better job of explaining my concern. I understand accrual basis accounting. That is why I don't understand the reason behind why my P&L is showing deposits as income on my P&L. This screenshot is the P&L being produced with Accrual chosen as the accounting basis. Thanks again, Karen

@karenjoiner 

It sounds like you are double counting sales

the invoice records as a sale in accrual basis as of the date it is saved

then you download banking and select income

as a result the same income is being booked twice

the work flow is enter transactions, download banking and match

so you have to enter the receipt of the money using receive payments, that clears the invoice in a/r and then you deposit it.  then you match the banking download to the deposit

Okay, thank you. The process I follow is: I enter invoices as work is performed; when payment is received I record that using Receive Payments (usually in the following month). At the end of the month I download transactions and enter deposits by customer. At that point in time I am to tying the deposit to invoice but only to the customer. As I said before, the deposits are going to a name my CPA set up as Income type. I am thinking that should be set up as Accounts Receivable. Would a fix be to stop linking them to the Income type and record them to Accounts Receivable?