I am Cash Basis and my P&L shows some unpaid invoices as income??? Why is this happening?

Open one of these invoices and evaluate what is here, such as a Credit Memo is linked to it, or you put a negative or Discount here; or a partial payment is applied to it. And Inventory Sales should show, even on cash basis, because selling inventory means you lost asset value, from inventory.

I am having the same issue as the original post. The unpaid invoices that show up in the cash basis reports have a line item entered for a discount (negative amount). Is there a way to have a negative line item on the invoice but not have it show up in the cash basis income statement until the invoice is paid?

This is the same as a Payment: "have a line item entered for a discount (negative amount). Is there a way to have a negative line item on the invoice but not have it show up in the cash basis income statement'

A Credit Memo that is applied, a Discount or other Negative entry on the invoice, all are the same as Paid. Paid by Value, not by new money. That is the correctly reporting for Cash Basis. Please see my attachment.

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@qbteachmt wrote:

 

 

A Credit Memo that is applied, a Discount or other Negative entry on the invoice, all are the same as Paid. Paid by Value, not by new money. That is the correctly reporting for Cash Basis. Please see my attachment.

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  So if there is an unpaid invoice (for a service), with a discount, the discount shows as income on a cash P&L.  This makes no sense.

"the discount shows as income on a cash P&L.  This makes no sense."

It makes Accounting Sense, though.

And that is why I recommend using Credit Memos, not putting negatives on invoices. And now you control the Date on the credit memo, so you can control when this is considered to be discounted, such as the Same Date as the Payment is made.

Oh, sorry, let me explain this, again: The Discount is Allocated. Please review that attachment I provided. Whether you link it to income or expense, is not the issue. The Allocation results in everything being partially paid. Example:

$100 various Sales income items + 7% sales tax liability = $107 owed. Apply $50 partial payment or credit or discount. Now everything, even the Sales taxes, is $50/$107 Paid, for Cash Basis reporting.

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@qbteachmt wrote:

 

It makes Accounting Sense, though.

 

 

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LOL

All,

Sorry to resurrect this conversation. I am having a similar problem, and I'm trying to figure out an efficient way to get around it.

Essentially on each invoice we create a retention line that is 10% of the invoice, which will not get paid until the end of the contract. This reduces AR and increases the retention account (current asset). No cash is exchanged, no value is exchanged. The problem is that when we create an invoice with a retention line, the cash P&L shows income of 10% of the invoice.

I would really like to keep track of our retention amounts for forecasting purposes. 

Any thoughts?

If you use a Discount type item for your retention line, then this won't happen.  Discounts will only show "income" as payments are applied to the invoice.

In your case, where the "discount" is a transfer to an asset account, when the invoice is fully paid, the payment and the discount together will show the full amount of the invoice - before the retention line - as income, which is a bit odd really, but I think the only way it can work as then the invoice is fully paid off.

In this case, one thing you can do when the customer pays that last 10% is to create a new invoice that uses an item set up with the same asset account and apply the payment to it.

In my situation. The April and May invoices were both paid on April 27th. If it's cash basis, all the income should show in April, but it's splitting it between April and May, since that is what the invoices are dated.  This is not correct cash accounting. 

I'm here to get this reporting issue resolved in no time, @Andreas,

You're right. In a cash basis accounting, income is reported at the time you received it. However, this is not always the case in QuickBooks. If the payment is dated before the invoice creation, the system assumes it as accrual transaction and will record it based on the date indicated on the sales form.

Note that in the accrual method of accounting, it treats a sale as income even before you have actually been paid for it.

Though the report works fine for payments dated on or after the invoice date. See this:

Therefore, the program is working as designed. The date of the transaction is important when it comes to reporting.

I'm attaching these articles for additional reference:

Understand reports in QuickBooks Desktop.

Customize reports in QuickBooks Desktop.

Let me know if you have other questions about this or need further assistance with other things in QuickBooks. I'll be right here to help you.

Thanks for your explanation.  That makes sense now and I will keep it in mind if it happens again.  Good thing it's not a year end stmt.  One other question...do you know if QB will ever fix the issue of when I import IIF payroll files from online intuit payroll...it automatically assigns each direct deposit item, including tax payments a check number? This drives me crazy and is a defect of QB 2019 desktop version that I have addressed with both Intuit payroll and QB in the past. Each entity passes the buck. Meanwhile, it takes me a lot of additional time to blank out each ck number, running 10 payrolls. One of my clients has 10 employees weekly payroll, so that's about 60 ck numbers I have to manually delete per month

Thank you for getting back to us here on the Community page, @Andreas.

When importing an IIF file from Intuit Online Payroll, the data or information that's imported to QuickBooks Desktop depends on the option you've selected under the Printing Employee Paychecks section. You may need to select the desired option from there.

1. Go to the Setup column, then click on Preferences under Export.
2. Select either I will print paychecks using Intuit Online Payroll, write them by hand, or use direct deposit or I will print paychecks using QuickBooks Desktop for Windows (IIF).

Post again if you have any other questions. I'm always here to help. Have a good day!

Did you ever figure this out? We do a negative line for the - 10% retention but the P&L shows that the retention got paid even though it did not yet!

I’m here to help sort this out so your Profit and Loss report shows accurate information, @RebeccaTiffany.

Before that, can you share how you've recorded the negative line for the 10% retention? Also, where did you add the entry in QuickBooks?

You may want to review the entry to ensure it's not categorized as an actual payment. Furthermore, consider checking your report basis to make sure QuickBooks displays correct information for you.

If everything is accurate, you can use the Verify and Rebuild Data tools to rectify this. These features fix company data issues to help users operate tasks without interruptions.

Here’s how:

1. Open your QuickBooks account.
2. Go to the File menu, then select Utilities.
3. Choose Rebuild Data, then follow the onscreen steps to save a backup.
4. Let the tool repair your file.
5. Once finished, select OK.
6. Go back to your File menu, then hover over Utilities.
7. Select Verify Data.
8. If QuickBooks doesn't find any problems, select OK. Otherwise, click on the Rebuild Now option.

I’m adding some comprehensive guides that provide insights into how QuickBooks generates reports and ways you can personalize them to draw the information you need the most:

• Understand reports
• Customize reports in QuickBooks Desktop

If you have other questions or concerns about managing your financial statements, please feel free to add comments below. I'd be happy to assist you further, @RebeccaTiffany.

I looked at a QB article on how to record retention and the accounts to use and everything is set up correctly. There is a retention product that I record on an invoice line and I input a negative (-) amount. That retention product is tied to the income account retainage receivable which is tied to Accounts receivable