Chapter 25
Useful QuickBooks Reports and Analysis Tools
In this chapter:
• The QuickBooks Report Center
• Standard financial reports
• Financial activity reports
• Company Snapshot
• The External Accountant
• Client Data Review tool
By now, you’ve probably already discovered how QuickBooks makes it easy for you to enter and keep track of your businesses transactions. Now it’s time to run and analyze the reports that will not only help you better manage your day-to-day operations, but also give you insight into how your business is doing.
This chapter is designed to introduce you to the most common reports that QuickBooks users rely on and to explain the information contained in them. Chapter 26 builds upon what you learn in this chapter by explaining how you can customize and memorize any QuickBooks report with your preferred settings.
Start with the Report Center
In the Report Center, you can get a dynamic preview of the built-in reports that are available in QuickBooks. It’s also where you can access reports that have been contributed by other QuickBooks users and keep track of reports that you especially like by adding them to your list of favorites. Choose Reports | Report Center or click the Reports icon on the Top Icon Bar to get there (see Figure 25-1).
FIGURE 25-1 |
The Profit & Loss Standard report as seen in the Grid view in the Report Center |
There are many ways you can view samples of the reports that belong to a particular category. Start by selecting a report category from the Standard tab on the left. QuickBooks displays a sample and a short description of the reports available for that category in the main window, depending on the view you’ve chosen. Next, select the view in which you want to display the category. The Report Center has three view types: Carousel, List, and Grid (the default view). All views provide the same options and quick access to multiple reports, but they’re arranged in different ways. Experiment with the different views to find the one that works best for you.
If you double-click the report display or description itself, the report opens; it’s not a sample report—it’s an actual report on your company.
In addition to the Standard tab that is displayed by default when the Report Center opens, four other tabs give you quick access to reports that you’ve memorized, chosen as favorites, and viewed most recently. You can also see reports that have either been shared by you or contributed by others.
Drill Down for Details
When you create and view a report, you can investigate the information that’s shown by drilling down to the details behind the displayed totals. Position your mouse over a total, and your mouse pointer turns into a magnifying glass with the letter “Z” (for zoom). Double-click to see the details behind the number.
• If the report is a summary report, the detail report that opens is a list of transactions that made up the total on the original report. You can drill down into each listing to see the original transaction.
• If the report is a detail report, the list of individual transactions is displayed. You can drill down into each listing to see the original transaction.
Standard Financial Reports
Accountants, bookkeepers, and business owners can keep an eye on the company’s health and financial status with a group of reports that are generally referred to as the standard financial reports.
These are also likely the reports your banker will ask to see for loans and lines of credit, and if you’re selling your business, these are the initial reports the potential buyer wants to see.
Profit & Loss Report
Your Profit & Loss report is probably the one you’ll run most often. It’s natural to want to know if you’re making any money. A Profit & Loss report is sometimes called an income statement. It shows the total of all your income accounts and all your expense accounts, and then puts the difference between the two totals on the last line. If you have more income than expenses, the last line is a profit; if not, that last line is a loss.
There are several variations of the Profit & Loss report available in QuickBooks. The ones most widely used are covered in the following section and can be accessed by choosing Reports | Company & Financial.
Profit & Loss Standard Report
The Profit & Loss Standard report (shown in Figure 25-2) is a basic report that follows a conventional format:
FIGURE 25-2 |
The Profit & Loss report is probably the report you’ll run most often. |
• The income is listed and totaled by both account and subaccount.
• The Cost Of Goods Sold accounts are listed, and the total is deducted from the income total to show the gross profit.
• The expenses are listed and totaled by both account and subaccount.
• The difference between the gross profit and the total expenses is displayed as your net ordinary income (or loss).
ProAdvisor Tip: Click the Collapse button on the report menu bar to show income and expense totals by parent account only. To return the report to its default format, click the Expand button to view report totals by account and subaccount.
When you run a Profit & Loss report, the default date range that QuickBooks sets is the current month to date. This means that you’ll need to change the date range to year to date—otherwise, you’ll be looking at information from only the current month.
Click the arrow to the right of the Dates field and change the date range to This Fiscal Year-To-Date. The resulting display is what you want to see—an income statement for your business so far this year.
Profit & Loss Detail Report
The Profit & Loss Detail report lists every transaction for every account in the Profit & Loss format. This report is a good one to run if you notice some numbers that seem “not quite right” in the standard P&L, or if you just want to ensure that each and every transaction you’ve entered for a period of time has made its way to the account that you expected.
Profit & Loss YTD Comparison Report
The YTD (year-to-date) Comparison report compares the current month’s income and expense totals with the year-to-date totals. Each income and expense account is listed.
Profit & Loss Prev Year Comparison Report
This is a Profit & Loss report for the current year to date, with an additional column that shows last year’s figures for the same period. This gives you an easy way to see how your business is doing relative to the previous year. What are really useful are the two additional columns that show you the difference between the years in either dollars or percentage.
Balance Sheet
A Balance Sheet report is specifically designed to show only the totals of the Balance Sheet accounts (assets, liabilities, and equity) from your chart of accounts—information that’s critical to understanding your business’s financial health.
The Balance Sheet balances because it’s based on the age-old accounting formula:
Total Assets = Total Liabilities + Total Equity
QuickBooks offers several Balance Sheet reports, and each of them is explained in this section. Select the one you want to see from the Report Center, or choose Reports | Company & Financial and then click one of these reports.
Balance Sheet Standard Report
The Balance Sheet Standard report lists the balance in every Balance Sheet account (unless the account has a zero balance) and subtotals each type of asset, liability, and equity in addition to reporting the totals of those three categories. By default, the report displays totals as of the fiscal year-to-date figures, but you can change the As Of date.
Balance Sheet Detail Report
This report displays every transaction in every Balance Sheet account. By default, the report covers a date range of the current month to date. Even if it’s early in the month, this report is lengthy. If you change the date range to encompass a longer period (the quarter or year), the report goes on forever.
If you want to see a Balance Sheet report just to get an idea of your company’s financial health, this is probably more than you wanted to know.
Balance Sheet Summary Report
This report is a quick way to see totals, and it’s also the easiest way to answer the question, “How am I doing?” All the Balance Sheet accounts are subtotaled by type, as shown in Figure 25-3.
FIGURE 25-3 |
Check your financial health with the Balance Sheet Summary report. |
Balance Sheet Prev Year Comparison Report
This report is designed to show you what your financial situation is compared to a year ago, and it displays the following four columns:
• The year-to-date balance for each Balance Sheet account
• The year-to-date balance for each Balance Sheet account for last year
• The amount of change in dollars between last year and this year
• The percentage of change between last year and this year
If you’ve just started using QuickBooks this year, there’s little reason to run this report. Next year, however, it’ll be interesting to see how you’re doing compared to this year.
Trial Balance
A trial balance is a list of all the accounts in your chart of accounts and their current balances. It’s a quick way to see what’s what on an account-by-account basis. Most accountants ask to see a trial balance when they’re preparing your taxes or analyzing the health of your business.
To see a trial balance, choose Reports | Accountant & Taxes | Trial Balance. Your company’s trial balance is displayed on your screen, and you can scroll through it to see all the account balances. The bottom of the report shows a total for debits and a total for credits, and they’re equal.
By default, the trial balance displays every account (including inactive accounts), even if an account has a zero balance. That’s because most accountants want to see the entire list of accounts, and sometimes the fact that an account has a zero balance is meaningful.
Cash Flow Reports
The list of reports in the Company & Financial submenu includes two cash flow reports: Statement Of Cash Flows and Cash Flow Forecast. The difference between them is that the Statement Of Cash Flows displays historical information based on the data in your company file, and the Cash Flow Forecast looks ahead and forecasts cash flow based on the history in your company file.
Statement Of Cash Flows
The Statement Of Cash Flows report displays the history of your cash position over a given period (by default, the Dates field is set to This Fiscal Year-To-Date, but you can change the interval). This is one of the reports you’ll probably be asked for by a banker or a potential buyer; it’s not a report that provides quick analysis about whether you’re making a profit.
This is an accrual report that self-modifies to report on a cash basis, and the lines on the report show you the adjustments that were made behind the scenes to provide cash-based totals. If you have no asset accounts that involve money owed to you—such as accounts receivable (A/R), or loans you made to others—and no liability accounts that involve money you owe—such as accounts payable, or loans—then no adjustments have to be made because you’re essentially operating your business on a cash basis.
A cash flow report has several categories and, depending on the general ledger postings, QuickBooks provides category totals as follows:
• Operating Activities The postings involved with general business activities
• Investing Activities The postings involved with the acquisition and sale of fixed assets
• Financing Activities The postings involved with long-term liabilities and, if the business is not a C-Corp, postings of owner/partner investments in the business and draws from the business
QuickBooks uses specific accounts for this report, and you can view and modify those accounts as follows:
1. Open the Statement Of Cash Flows report.
2. Click the Classify Cash button at the top of the report window to open the Reports & Graphs Preferences window.
3. On the Company Preferences tab, click the Classify Cash button.
4. In the Classify Cash dialog, add or remove accounts or move an account to a different category.
Cash Flow Forecast
The Cash Flow Forecast report predicts your cash flow as of a specific date range (by default, the next four weeks, but you can change this). The forecast predicts cash in and cash out and then displays the cash balances that result from those cash flows.
This report is based on income predicted from current receivables and outgo predicted by current payables. If your business operates mostly on a cash basis (you usually collect payment from customers at the time of the sale and you usually write direct disbursement checks instead of entering vendor bills), there’s not much future cash flow for QuickBooks to predict.
This report assumes that both you and your customers pay bills based on their terms. If your customers pay late, you can tell QuickBooks to “re-predict” the flow of cash and the dates you can expect that cash by using the Delay Receipts field at the top of the report window. Enter the number of days after the due date you expect to receive money from your customers. For example, if your terms to customers are 30 Days Net, and you know from experience that most of your customers pay you in 60 days, enter 30 in the Delay Receipts field. QuickBooks has no field on the report window for you to enter the number of days you take beyond the terms your vendors offer; this report assumes you always pay on time.
Other Useful Reports
QuickBooks offers many other financial reports on your transactions that are categorized by the type of activity for those transactions. Here’s a brief overview of those reports.
Sales Reports
If you choose Reports | Sales, you’ll see a list of built-in reports you can open to see your sales reported in a summarized or detailed fashion. Table 25-1 explains the contents of each report. Refer to Chapter 26 to learn how these reports can be customized to include additional data or “filtered” to only display information of particular importance to you.
TABLE 25-1 |
Sales Reports Built into QuickBooks |
Vendor Reports
Choose Reports | Vendors & Payables to track financial data related to vendor payments. The list of reports in the submenu includes A/P aging, Form 1099 data, and other useful information. Many businesses find the Unpaid Bills Detail report most useful since it lists every outstanding bill and vendor credit as of the report date.
Inventory and Purchasing Reports
If you’ve enabled inventory tracking, choose Reports | Purchases or Inventory. QuickBooks provides the following useful reports:
• Purchases Reports These give detail on purchases you’ve made and can be sorted and totaled by vendor or item. Open Purchase Order reports can also be found on the Purchases submenu, and can be listed by item or customer.
• Inventory Reports There are several reports available here that you can use to get your inventory value and stock status as of the report date. The Inventory Valuation Detail report is one report you can use to quickly determine how QuickBooks has calculated your current on-hand quantities and inventory asset value.
Employees & Payroll Reports
The Employees & Payroll submenu provides a number of reports that range from important to useful, depending on how you and your accountant want to analyze your financials.
Banking Reports
To track your bank balance activities, you can display reports on them, including check and deposit detail data, missing check numbers, and reconciliations. See Chapter 13 to learn about reconciliation processes and troubleshooting reconciliation problems with the reconciliation reports in this Reports submenu.
Reporting by Class
If you’ve enabled class tracking and have assigned classes to all of your income and expense transactions, you can run two types of reports:
• Individual class reports
• Reports on all classes
Reporting on a Single Class
To report on a single class, open the Class List and select the class on which you want to report. Then press CTRL-Q to open a QuickReport on the class. This report will give you a list of all the transactions that have been assigned to that class. When the Class QuickReport appears, you can change the date range or customize the report as needed. Using the Sort By drop-down list, you can also sort the report by type to group together transactions of the same type (such as invoice, bill, and so on).
Reporting on All Classes
If you want to see one report on all the classes, open the Class List and click the Reports button at the bottom of the list window. Choose Reports On All Classes, and then select Profit & Loss By Class, Profit & Loss Unclassified, or Graphs. The Graphs menu item offers a choice of an Income & Expenses graph or a Budget Vs. Actual graph.
• Profit & Loss By Class Report The Profit & Loss By Class report is the same as a standard Profit & Loss report, except that each class uses a separate column. The Totals column provides the usual P&L information for your company for each class that you’ve created. This report is also available on the submenu by choosing Reports | Company & Financial.
• Profit & Loss Unclassified Report This report displays P&L totals for transactions in which items were not assigned to a class. You can drill down to the transactions and add the appropriate class to each transaction. (This will likely be a rather lengthy report if you enable class tracking after you’ve already begun using QuickBooks.)
• Graphs That Use Class Data You can also display graphs for income and expenses sorted by class or a graph that compares budget versus actual figures sorted by class.
Accountant & Taxes Reports
The reports that you or your accountant will need for year end or to identify entries that may need adjusting can be found on this submenu under the Reports menu. Choose Reports | Accountant & Taxes.
Audit Trail Report
QuickBooks has a feature called the Audit Trail that is automatically—and behind the scenes—keeping track of all the accounting transactions that you (and all your QuickBooks users) add, modify, or delete in your company file. The Audit Trail report lists these transactions along with the date; the time; and the user who entered, modified, or deleted the transaction. The Audit Trail report should be your go-to report if you notice any suspicious activity in your QuickBooks file (like missing or changed transactions). Choose Reports | Accountant & Taxes | Audit Trail.
Voided and Deleted Transactions Reports
QuickBooks offers two reports you can use to track voided and deleted transactions. Both reports are available by choosing Reports | Accountant & Taxes and then selecting either of these reports: Voided/Deleted Transactions Summary or Voided/Deleted Transactions Detail.
Voided/Deleted Transactions Summary Report
This report displays a summary of all voided and deleted transactions in the selected period. The report shows the current state (void or deleted) and the original state (including the amount) of each affected transaction.
Voided/Deleted Transactions Detail History Report
This report provides more information about both the original transaction and the change. In addition to the information provided by the Voided/Deleted Transactions Summary report, this report displays the credit and debit postings and the posting accounts. If items (including payroll items) were involved in the transaction, they’re also displayed.
Company Snapshot
You can get a quick answer to the question “How’s business?” in the Company Snapshot window (see Figure 25-4). Click Snapshots from the Icon Bar to open this window.
FIGURE 25-4 |
View a summary of your financial status using the Company Snapshot. |
In addition to displaying an easy-to-understand summary of the money that’s moved in and out, this customizable window provides information on tasks you should perform, account balances, and A/R and A/P data by customer/vendor. Clicking the Add Content link at the top of the window allows you to add graphs and tables to your “dashboard.” Double-clicking an area of interest in a graph or table will display a more detailed report or bring you to an account’s register. You can also modify the report content (such as date ranges), rearrange the positions, or completely remove a graph or table from the Snapshot window.
For example, to see details about a specific customer’s A/R balance, double-click the customer name in the Customers Who Owe Money listing to display an Open Balance report for that customer, sorted and totaled by job.
In addition, selecting the Payments or Customer tab opens new snapshot windows that give you quick access to the details on money due your business and the particulars on the customers that you do business with (like how long they’ve been customers and how long, on average, they take to pay you). To view more detail on any of the information presented in the snapshot view, just double-click an element.
The data displayed in the Company Snapshot window is always appropriate for the permissions granted to the current user. If the user does not have permission to see sensitive financial data, no bank balances appear in the Account Balances section of the window. In addition, the Income And Expense Trend graph section has no data; instead, the user sees a message explaining that he or she needs permission to view the area. Various elements of the window are displayed or hidden, depending on the current user’s permissions. (Learn about configuring users and permissions in Chapter 8.)
External Accountant
An External Accountant is a specific type of user who has the same rights as the QuickBooks Admin but with the following exceptions:
• The External Accountant cannot create, edit, or remove users.
• The External Accountant cannot view customer credit card numbers if the QuickBooks Credit Card Protection feature is enabled (covered in Chapter 3).
You should create an External Accountant user so that when your accountant (or a bookkeeper from your accountant’s office) comes to your office, the Client Data Review tools (discussed in the next section) are available.
Creating an External Accountant
To create a user who is an External Accountant, you must be logged into QuickBooks as the Admin (only the QuickBooks Admin can create users).
1. Choose Company | Set Up Users And Passwords | Set Up Users.
2. In the User List dialog, select Add User.
3. Enter the user name and password, and click Next.
4. Select External Accountant and click Next.
5. QuickBooks asks you to confirm this action—click Yes.
6. Click Finish to create the External Accountant.
Converting an Existing User to an External Accountant
Many companies have already set up a user name for the accountant. Even if the accountant’s login provides full permissions, the Client Data Review tool isn’t available on the Company menu unless an External Accountant is logged in (except in Premier Accountant Edition). You can edit the accountant’s user account to convert it to an External Accountant.
Select the accountant’s user account and click Edit User. Don’t change the user name and password data. Click Next, and in the next window, select External Accountant and follow the prompts to save this user name as an External Accountant.
Client Data Review
The Client Data Review tool is only available via the Company menu when a user logs into your QuickBooks file as an External Accountant.
Your accountant can use this tool to examine your QuickBooks data and troubleshoot any data entry mistakes or other potential problems in your company file (see Figure 25-5). In addition, any changes made by the External Accountant during a review are separated from the changes made by regular QuickBooks user, including the Admin user, in the Audit Trail report.
FIGURE 25-5 |
Your accountant can review your data to make sure your financial information is correct. |
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