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tjonesatolfchurchnet
April 23, 2025
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Unpaid invoices showing up on P&L

  • April 23, 2025
  • 3 replies
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QB Desktop

Cash Basis

Using Undeposited Funds to receive payments

Invoices showing up on P&L

What is proper way to set up items list?

Best answer by CamelleT

I know how important it is for your financial reports to reflect your business activities accurately. Let me discuss how invoices are reflected on Profit and Loss (P&L) reports in QuickBooks Desktop (QBDT) and explain the proper way to set up items, Tjones.

 

First off, could you specify which P&L report you generated? Was it the Standard or Detail one? Cash or Accrual? If you run a P&L (Accrual) Detail report, it will display all invoices, both paid and unpaid. 

 

Moreover, under Cash-based accounting, unpaid invoices should not appear in your P&L report. However, when you use Undeposited Funds (UF) to receive payments, QuickBooks treats these payments as received and recognizes them as income in the P&L report.

 

So, if you’re using Accrual accounting, unpaid invoices will immediately show up in your P&L when the invoice is generated. If you're on a Cash basis, they won’t show until the customer pays.

 

Then, regarding the proper way of setting up items, you'll just need to ensure you are using the correct Income account. Here's how:

 

  1. Go to the Lists menu and select Item List.
  2. Double-click the item name.
  3. In the Account dropdown, double-check and ensure you are using the appropriate Income account.

 

For more information about item configuration in QBDT, check out this article: Add, edit, and delete items in QuickBooks Desktop.

 

Finally, I'll share this resource to help you personalize the data of your report, ensuring they deliver the insights you need: Customize reports in QuickBooks Desktop.

 

If you have other questions about managing financial reports in QBDT, comment below. We're always around to assist you.

3 replies

C
CamelleTAnswer
April 23, 2025

I know how important it is for your financial reports to reflect your business activities accurately. Let me discuss how invoices are reflected on Profit and Loss (P&L) reports in QuickBooks Desktop (QBDT) and explain the proper way to set up items, Tjones.

 

First off, could you specify which P&L report you generated? Was it the Standard or Detail one? Cash or Accrual? If you run a P&L (Accrual) Detail report, it will display all invoices, both paid and unpaid. 

 

Moreover, under Cash-based accounting, unpaid invoices should not appear in your P&L report. However, when you use Undeposited Funds (UF) to receive payments, QuickBooks treats these payments as received and recognizes them as income in the P&L report.

 

So, if you’re using Accrual accounting, unpaid invoices will immediately show up in your P&L when the invoice is generated. If you're on a Cash basis, they won’t show until the customer pays.

 

Then, regarding the proper way of setting up items, you'll just need to ensure you are using the correct Income account. Here's how:

 

  1. Go to the Lists menu and select Item List.
  2. Double-click the item name.
  3. In the Account dropdown, double-check and ensure you are using the appropriate Income account.

 

For more information about item configuration in QBDT, check out this article: Add, edit, and delete items in QuickBooks Desktop.

 

Finally, I'll share this resource to help you personalize the data of your report, ensuring they deliver the insights you need: Customize reports in QuickBooks Desktop.

 

If you have other questions about managing financial reports in QBDT, comment below. We're always around to assist you.

BigRedConsulting
BigRedConsulting
April 23, 2025

@CamelleT 

RE: If you run a P&L Detail report, it will display all invoices, both paid and unpaid.

 

Only on an accrual basis - normally - which is just like the summary P&L. The two should match exactly.

 

RE: under Cash-based accounting, unpaid invoices should not appear in your P&L report.

 

Well that depends.

 

RE: However, when you use Undeposited Funds (UF) to receive payments, QuickBooks treats these payments as received and recognizes them as income in the P&L report.

 

1) The user didn't ask about unapplied payments.

2) Only QuickBooks Online does this - and it only started doing so recently. QuickBooks Desktop does not - which I maintain is correct.

 

RE: Then, regarding the proper way of setting up items, you'll just need to ensure you are using the correct Income account.

 

The income account chosen for an item has no bearing whatsoever on whether or not the invoice appears on a cash basis P&L.

 

 

Rainflurry
Rainflurry
April 23, 2025

@tjonesatolfchurchnet 

 

"Using Undeposited Funds to receive payments"

 

If you have received payments to Undeposited Funds, then you have been paid, and should show on your cash basis P&L.  

    BigRedConsulting
    BigRedConsulting
    April 23, 2025

    @tjonesatolfchurchnet 

    Unpaid invoices will not normally appear on the cash basis P&L, either the summary or the detailed versions.

     

    However, there are cases where they do appear. The most common case, probably, is when there are negative line items on the invoice, which function like returns of previously sold things.

     

    I'm not sure how you've determined that unpaid invoices are appearing. If by double-clicking numbers on the summary P&L, is there anything different about the unpaid invoices that appear compared to the ones that do not? For example, do they have negative line items?

    Rainflurry
    Rainflurry
    April 23, 2025

    @BigRedConsulting 

     

    "Unpaid invoices will not normally appear on the cash basis P&L, either the summary or the detailed versions.

     

    However, there are cases where they do appear. The most common case, probably, is when there are negative line items on the invoice, which function like returns of previously sold things."

     

    Only the reduction in COGS from the unpaid invoice shows on cash basis P&L, but not income, right?  

     

    "1) The user didn't ask about unapplied payments."

     

    I don't believe @CamelleT or anyone referred to unapplied payments.  The context of this thread is payments applied to invoices.   

     

    "2) Only QuickBooks Online does this - and it only started doing so recently. QuickBooks Desktop does not - which I maintain is correct."

     

    If a user enters a customer payment using Receive Payments, cash increases and A/R decreases.  Are these customer prepayments not considered income when received on cash basis?   

    BigRedConsulting
    BigRedConsulting
    April 24, 2025

    @Rainflurry 

    RE: Only the reduction in COGS from the unpaid invoice shows on cash basis P&L, but not income, right? 

     

    I don't think GOGS normally appear on a cash basis P&L for an unpaid invoice, as the sale is not generally included until paid. In edge cases where it does, I'd expect the rest of the invoice details to also appear so things internally 'balance'.

     

    RE: If a user enters a customer payment using Receive Payments, cash increases and A/R decreases. Are these customer prepayments not considered income when received on cash basis? 

     

    Not in QuickBooks Desktop. A transfer between cash and A/R isn't income. It's just a transfer between two balance sheet accounts. This is true whether the transfer is an increase or a decrease to the cash account, and if the other account is A/R or any other balance sheet account. Until the transfer is applied to something, or another transaction is entered to complete the 'accounting event', we cannot know what it is for. For example, if it pays off a loan, it will never be income. If a portion of it pays the sales tax due for an invoice, that portion will never be income. If the invoice it is eventually applied to itself doesn't use any income accounts, the payment will never be income.

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