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NicTrio
December 20, 2018
Question

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

  • December 20, 2018
  • 3 replies
  • 0 views

Hi, So we use cash basis for our company and recently I noticed that there are some unpaid invoices showing up in my Profit and Loss under Income. Why would this happen? I checked and all setting are set to Cash Basis. I made sure that it says Cash Basis on the report also.

Help?..

3 replies

A
Anonymous
December 20, 2018

This can happen if you have returns or payments on the invoices, or if they include line items that use a non-inventory balance sheet account, like an asset or liability. 

Since all accounts except AR and AP are 'cash' (their balances are the same if you are on a cash or accrual basis) transfers like this from AR and AP must impact the AR or AP balances just as they do the other accounts' balances in order for your Balance Sheet  to actually balance.

    qbteachmt
    qbteachmt
    December 20, 2018

    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.

    A
    Arif3
    January 8, 2019

    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?

    qbteachmt
    qbteachmt
    January 8, 2019

    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.

    M
    mattdavis6
    January 24, 2020

    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?

    BigRedConsulting
    BigRedConsulting
    January 25, 2020

    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.

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