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I have a consulting business Sole /LLC and I am using QB for…

I have a consulting business...
I have a consulting business Sole /LLC and I am using QB for accounting. My question is in reference to the P/L Statement.

As I am looking at the Net Profit amount, it is about 15K less than the amount I actually have in the bank. Why is this? Should the amounts be close to equal?
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Answered in 7 minutes by:
12/12/2013
QuickBooks ProAdvisor MBA PHR
QuickBooks ProAdvisor MBA PHR, Management Consultant, QuickBooks ProAdvisor, MBA, PHR
Category: Financial Software
Satisfied Customers: 82
Experience: QuickBooks Pro, POS Point of Sale, Online & Enterprise Solutions
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QuickBooks ProAdvisor MBA :

HI, My name is Anna & I will be assisting you on JustAnswer today. In a brief answer, No your Net Profit & your bank account balance will rarely be close to equal. Net profit reflects all payments made as if they have been received & processed by the vendor immediately, however it is common that many vendors will not deposit payments for several weeks, sometimes longer.

QuickBooks ProAdvisor MBA :

Net Profit also does not accurately reflect Liabilities on credit cards unless you are tracking those within QB on a regular basis. The best way to use QuickBooks to determine your checking account balance is to make sure you are keeping up with your monthly account Reconciliations via the QB Reconcile wizard. You can use this for checking, savings & credit cards. It really works well to help you see your true balances on an up to date basis. It also helps tomake sure items are feeding properly to your reports & helps you identify errors.

QuickBooks ProAdvisor MBA :

When you run a reconcile, if you have not been doing so, you may find that your net profit is considerably different. You may find several checks have not cleared the bank, duplicate entries... Only when you know that your balances are matching exactly on a specific date can you have a true net profit report. Generally a good time to run the report is at the closing of a previous month.

Customer:

Thanks -

Customer:

I see I have about 25K in descripencies

Customer:

Is that a problem and how does that impact my net Profit amount?

QuickBooks ProAdvisor MBA :

You are totally welcome. Congratulations on your successful business! You will need to rectify those discrepancies one by one to get to your net profit\

QuickBooks ProAdvisor MBA :

Well its math, so when things are where they dont belong, the total is affected. It depends on the issues causing the problems. Checks that havent cleared the bank will make you think you have more money than reality. The same with bills you havent received, havent entered into QB but you still owe when due

Customer:

So on the PL statement - Should there be a category of descrpencies??? What do you mean rectify?

QuickBooks ProAdvisor MBA :

The first, and only real starting point to getting to a true profit is to reconcile each of your accounts, monthly, to make sure the balances match in each. You do this by going to Banking>Reconcile & selecting the account you wish to start with.

QuickBooks ProAdvisor MBA :

No, there is not an account for Discrepancies, Discrepancies is a summary term for items that are not adding up properly. It is a reflection of usually several problems

QuickBooks ProAdvisor MBA :

Does the balance in your Checking Register exactly match your online checking balance, including all uncleared payments?

QuickBooks ProAdvisor MBA :

Rectify means to correct. If you have missing entries, you need to add them. If you have entries with incorrect amounts, you need to correct those. If you have items in the wrong category, you will need to fix those.

Customer:

Let me check

Customer:

No -

Customer:

According to the last update on 11/22 it is about 9k less

QuickBooks ProAdvisor MBA :

OK, first let me explain to you that downloading the checking data is not going to do it for you in terms of accounting. You have to manage these items closely bc downloading will lead you to so many problems thinking it is feeding correctly. This is not a hands off system.

QuickBooks ProAdvisor MBA :

You have to go thru the Banking>Reconcile steps for each Checking, Savings & Credit Cards you have each month. Reconcile each account separately to the statement each month.

QuickBooks ProAdvisor MBA :

Reconcile lets you "see" what is not feeding correctly & where items are missing

Customer:

ok - I understand this now and will be using the statements from now on. .

Customer:

so for the -25,575 Reconciliation Discrepancies

Customer:

is there anything I need to do about this?

QuickBooks ProAdvisor MBA :

Thank you for allowing me to assist you & for taking the time to rate my assistance on Just Answer. Please come back to me w/ future questions! http://www.justanswer.com/finance/expert-foxbizsolutions/

Customer:

it has both credit card Reconciliation Discrepancies and checking account Reconciliation Discrepancies

Customer:

Thanks!

QuickBooks ProAdvisor MBA :

Yes. Start with the Reconciles.

QuickBooks ProAdvisor MBA PHR
QuickBooks ProAdvisor MBA PHR, Management Consultant, QuickBooks ProAdvisor, MBA, PHR
Category: Financial Software
Satisfied Customers: 82
Experience: QuickBooks Pro, POS Point of Sale, Online & Enterprise Solutions
Verified
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