My boss had me doing the entries for multiple companies in Quickbooks. I go off of the bank statements and everything looks like it's coded correctly. When I printed him the P&L he said that there is no way we made that much profit. Why would it be off? Like I said, it doesn't look like anything is coded incorrectly. Please help!
Ok. I just checked it again and it does total correctly. When I added it up the other day I'm not sure what I did but it wasn't adding up. Thank you everyone for your help. I think I may still have to speak to a financial specialist to figure out why our profit is so high. The only other thing I can think of is that maybe something in the Chart of Accounts is off. Could that affect it?
@swoodling Well, there's a lot of variations, but it really comes down to one of a few general concepts.
1) Your income is overstated.
2) Your expenses are understated.
You stated that everything was coded correctly, and I am assuming you have been reconciling the bank accounts regularly.
One possibility is that your boss is considering the profit to include the full value of any depreciable assets and/or inventory purchased but not yet sold. It's a common pitfall for business owners to try and consider the full amount of expenditures as expenses, but it just ain't so. Not immediately, anyway.
Another is that inventory was not being transferred to COGS properly, though if you're just entering things straight from a bank statement, I have my reservations about whether inventory entered the picture in the first place.
Other than that, the only thing that comes to mind is if something meant to be an expense in the Chart of Accounts was instead categorized as a liability or other incorrect account type.
Unfortunately, you're probably best off just reviewing the subreport mentioned earlier to make sure that it was all put in correctly. Mistakes do happen.
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