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Dave CPA
Dave CPA, Accountant
Category: Tax
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Experience:  Vast knowledge within the accounting/tax industry
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My Net Income in Quickbooks P&L and my Tax Form Net Income

Resolved Question:

My Net Income in Quickbooks P&L and my Tax Form Net Income never match. QB uses it's COGS calcs and I use Begin Inv + Purchase - Used - End Inv method in my tax form. When I get to Balance sheet reconcilation my Retained earnings are always wrong because it uses it's Net Income based on it's COGS. My COGS via IRS method is higher by approximately $1500. Now in year two of my business my Retained Earnings are off by $3K. When reconciling my balance sheets it wants to know my book retained earnings which I ignore as invalid. Can I true up QB to my IRS based RE?
Submitted: 5 years ago.
Category: Tax
Expert:  Dave CPA replied 5 years ago.

Welcome to Just Answer,

To answer you question, there is nothing wrong with making a retained earnings adjustment to be in alignment with what you are reporting. I would expect that your inventory account is off as well. Then you would adjust your RE with your offset being inventory. In addition you might want to try and change the cogs method that qb uses so you don't have to keep doing this adjustment.

I hope this helps. Regards,
Dave CPA and other Tax Specialists are ready to help you
Customer: replied 5 years ago.
The problem seems to be specifically with the COGS calculation in QB. I am using the Manufacturing addition which supports Inventory Assemblies. Some of my Builds are debiting COGS in large amounts. I think if I can correct COGS in QB the rest will align. Do you know how I can figure out why a Build line item is showing up in the Credit column where the rest of my transactions show in Debit? I realize this is very specific to QB but appreciate any experience you can offer.
Expert:  Dave CPA replied 5 years ago.
I'm sorry I'm not an expert in QB and I'm only an experienced accountant. If you haven't tried this already here is the support link for QB. I really appreciate you business, and I wish you luck. I'm sure you will have no problem figuring it out.