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GinaMM
Level 2

Why does balance in the unapplied cash payment income account change the amount of net income on the cash flow statement

Hi,

Whenever we have a balance in the Unapplied Cash Payment Income account the net income on the Statement of Cash Flows is off by that same amount.

 

For example:

Net income on the P&L = 3,117,918.18

Per the Statement of Cash Flows the Net Income = 3,089,701.16

The $28,217.02 difference is the balance in the Unapplied Cash Payment Income account.

 

Help!  Our lender expects these numbers to be the same.

4 Comments 4
Maybelle_S
QuickBooks Team

Why does balance in the unapplied cash payment income account change the amount of net income on the cash flow statement

Hello there, @GinaMM.

 

Thank you for posting here in the Community. I can share some insights about Unapplied Payment in QuickBooks Online (QBO).

 

Unapplied Cash Payment income is an account being used to report cash basis income from your customer's payments that are received but not applied to any sales forms.

 

We also have these articles as additional guide and reference: 

If there's anything else you need help with, please feel free to reach back out. Have a great day.

GinaMM
Level 2

Why does balance in the unapplied cash payment income account change the amount of net income on the cash flow statement

I understand why there is an unapplied cash payment.  I do not understand why the Net income amount reported on the P&L is not the same amount of net income reported on the Statement of Cash flow?  The variance is the balance in the unapplied cash account.

Rose-A
Moderator

Why does balance in the unapplied cash payment income account change the amount of net income on the cash flow statement

Allow me to step in and help you sort this out, GinaMM.

 

The income statement reflecting a business's performance via its revenues, expenses, and profits. While the cash flow statement reflecting how that profit or loss flows throughout the company.

 

The cash account in the cash flow statement has three areas to look into:

 

  • Cash Flows from Operations.
  • Cash Flows from Investments.
  • Cash Flows from Financing.

 

Some Expense and Income accounts will be considered by the system as Non-cash income and expenses. Thus, they will appear under the 'Adjustments for non-cash income and expenses' section on the Cash Flow statement instead of the 'Profit for the year' section. This is due to the Detail Type used when setting up the Income/Expense account.

 

To see an accurate picture of your cash flow, you have to consider more than your company’s cash disbursements.

 

You might find your cash in hidden asset accounts like inventory, fixed assets, accounts receivable, and prepaid insurance. Or in using cash to pay down debt, such as credit cards, accounts payable, or bank loans.

 

I recommend customizing the report to get the specific details you need. You can also memorize it to save its current customization settings. It serves as your record and helps you quickly access it for future use. 

 

Feel free to get back to me if you have any follow-up questions about this. I'd be more than willing to lend you a hand.

GinaMM
Level 2

Why does balance in the unapplied cash payment income account change the amount of net income on the cash flow statement

Sorry, this still does not explain why the net income at the beginning of the Cash Flow Statement is not the same as the net income on the P&L.

 

The Unapplied Cash Payment Income Account that QuickBooks automatically created is a revenue account, so it should be part of net income on BOTH the income statement and the Cash Flow.  For some reason it is being included in the P&L total on one statement, but not the other.  How can this be corrected?

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