Unearned revenue and sales reports

Welcome to the QuickBooks family, Tim.

I'd be delighted to share with you some insights on how sales reports and revenue works in QuickBooks Online (QBO). 

First, you'll need to create a liability account and a retainer item to track your customers' upfront payments. I'll show you how.

1. Go to the Gear icon and select Chart of Accounts.
2. Click New.
3. From the Account Type drop-down menu, select Other Current Liabilities.
4. In the Detail Type drop-down menu, Trust Accounts - Liabilities.
5. Enter a name for the account (ex. Trust Liabilities).
6. Select an option from the When do you want to start tracking your finances from this account in QuickBooks? drop-down list.
7. Click Save and close.

Then create a retainer item. You can refer to this article for the complete process: Record a retainer or deposit.

In regards to how reports work, you can toggle it to view as Cash and Accrual basis. On the Cash basis, it shows income if you have received cash and expenses if you have paid in cash. While in an Accrual basis, it shows income regardless of whether your customers have paid the invoice. Thus, you may see that the amount of the invoices appears in the sales report even though it's hasn't been paid yet. 

I've added this link that you can read for more details (though the article is for QuickBooks Desktop, the workflow also applies to QBO): Differentiate Cash and Accrual basis.

Furthermore, I'd also recommend working with your accountant for additional guidance. They'll be able to share with you some best practices in managing your accounts.
 
When everything is all set, you might want to check out this resource that can guide you in matching your accounts accurately: Reconcile an account in QuickBooks Online.

I'll be here if you need more help with upfront payments and reports in QBO. Please feel free to tag me in your reply and I'll get back to you as soon as possible. Keep safe!

Hi @JasroV 

Thank you very much for the quick response! Seems like a solution I can use :-) 

Do I understand correctly that when we invoice our customers for deposits/upfronts using the retainer item, the invoiced amount won't show up as sales? This wouldn't happen until step 5 "turning retainers into credits on invoices"? 

Tim

Hello! please help... 

My check register in QuickBooks desktop is reconciled based on my bank statement. However, when i create an invoice and apply a 50% partial payment towards the invoice, i notice that my revenue in my P&L increases. 

I am on accrual basis in Quickbooks Desktop. Since quickbooks recognizes all invoices as income for the Month (paid or unpaid), how can i re-categorize my books so that my P&L revenue is not affected by unpaid invoices? Can i create another account specifically for those unpaid invoices, without it affecting my revenue in my P&L statement?

Thank you in Advance! 

Hello there, @gemma13.

I'm here to provide information about unpaid invoices affecting your Profit & Loss (P&L) report in QuickBooks Desktop (QBDT). Before anything else, can you share your ways of recording payments in QuickBooks? It's for us to have a better picture of your situation. 

Since you're on an accrual basis, unpaid/paid invoices will normally show in the P&L report. Moreover, you'll have the option to use an income account QuickBooks already set up for you. Or else, add a new one to your Chart of Accounts. Let me guide you on how:
 

1. In your QBDT file, go to the Lists menu, then select Chart of Accounts.
2. From the Account dropdown, select New.
3. Select an account type, then click on Continue.
4. Complete the account details.
5. Select Save & Close.

For detailed steps, kindly visit: Add, edit, or delete accounts in QuickBooks Desktop.

On the other hand, to ensure that your books are accurate when re-categorizing, I recommend consulting your accountant. Furthermore, applying a 50% partial payment to an invoice shouldn't have affected your P&L statement. There could be a data issue in your company file. This can be fixed by verifying and rebuilding your data in QBDT.

Additionally, I'll also share this link where you can search for articles that can serve as your reference to guide you in managing your QBDT file: QuickBooks Desktop Help Articles.

Feel free to leave a reply if you require further assistance with your sales reports. The Community team always has your back. Have a good one. 

Thank you for your quick response. I Truly appreciate it! 

I record payments by doing the following:

1) Create Invoice 

2) I "Receive Payment" 

3) The payment gets deposited into my Checking Account. I don't deposit into undeposited funds because in the past this was duplicating my revenue. I wasn't using it correctly and had duplicate income. 

After I reconciled my bank statement and compared my deposits for the month to my P&L revenue there was a difference similar to the remaining balance that my customers 50% paid invoice. 

What account in my chart of accounts QBDT could I create to journal entry differences in my P&L income? 

I have rebuild data & tried the tool hub to see if my file is damaged but it doesn't state any errors in my file.