P&L

@Accounting565 

It's increasing the expense as of the date of the journal entry (the expense debit).  Then, it is increasing income because the item(s) on the invoice must be linked to an income account and, when you apply the credit, income is booked on cash basis. 

Is there any other way to record the expenses on the invoice without affecting the income?

Hi there, Accounting565.

I can share some information about why both income and expense in the profit and loss are increasing.

I agree with the provided insights above about handling journal entries. It seemed working as expected since the items in the invoice are linked to the income account. Thus, it's reflected on a cash basis in the profit and loss. However, if you used the income account associated with the items in the invoice as the expense account, this will not show up in the profit and loss.

I've got a link here in case you'll want to customize your profit and loss report to get a better view of your business: Customize reports in QuickBooks Desktop.

Also, If you want to use the same settings of customized reports in the future, you can memorize them: You can refer to this article for the detailed steps: Create, access, and modify memorized reports.

Fill me in if you need help in handling your profit and loss. I'll be here to ensure your success. Keep safe and healthy.

@Accounting565 

Not if you want to "pay" the invoice.  The way you did it, you have created an expense that offsets the income, so there is no change in net (taxable) income, just an increase in gross income.      

@Accounting565 

RE: Is there any other way to record the expenses on the invoice without affecting the income?

If you mean expenses that decrease the invoice, use a Discount type item for those expenses and there will be no cash basis event when you record the invoice.

The invoice is a customer invoice. 

The expenses are sale expenses that should be deducted from sales.

The problem is the journal entry to decrease A/R and increasing expenses is ending up increasing the sales income and increasing expenses by the same expenses amount, so the net income is showing up higher than it should be. 

The discount type is ending up increasing the income too in the P&L.

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@Accounting565 wrote:

The problem is the journal entry to decrease A/R and increasing expenses is ending up increasing the sales income and increasing expenses by the same expenses amount, so the net income is showing up higher than it should be. 

 

The journal entry to decrease A/R and increase expenses has no effect on sales income.  It is when you apply that credit (A/R reduction) to the invoice that sales income increases (on cash basis).  And, if the expense debit on the journal entry is the same amount as the items linked to a sales income account on the invoice, net income is unaffected.  If you're entering a $100 debit to expense on the journal entry and there are $100 of items linked to a sales income account on the invoice, net income will be unaffected.  $100 - $100 = $0

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@Rainflurry 

Correct the sales income increase when I apply the credit. The problem is that it is affecting the net income because it is increasing the sales income by the same amount of expenses, so the net income will be higher than just deducting the expenses from the original sales. I don't think QB has a solution for recording expenses to an invoice without affecting the income. I tried journal entries, discount items, expense items and they all lead to the same result.