Using QB 2015 for PC/Desktop
In QuickBooks it is very easy to pull up reports to monitor where your money is being spent. The problem I see most often is that the data is not relevant because the transactions were posted incorrectly. Before you start analyzing the data, you want to know that the expenses to the Profit and Loss Report are accurate.Although that may seem obvious, a lot of my work in my practice centers on cleaning up incorrectly posted transactions. We will assume for this article that all transactions are appropriately coded to the Profit and Loss, not the Balance Sheet, and that they are correctly coded to the right accounts. (A future article will explain how to conduct a thorough review of posted transactions to the Profit and Loss.)
The fundamentals of creating a standard Profit & Loss Report were described in my previous article, “The How To Guide of Profit & Loss Reports in QuickBooks, Part 3”. To monitor your expenses, we will now expand on that report. Some of your options for more informative Profit and Loss Reports are
- By Month for the current year’s months
- By Month compared to the previous year’s months
- By Year compared to one or more previous years
You can decide what time periods you want to show and you can choose to add percentage and/or dollar change columns. You can also narrow your reports to one or more Classes if you are monitoring expenses by location or other criteria. All of these options can be found in the Customize Report button.
These reports allow you to monitor your expenses over time and relative to your income; important tools to building a financially strong, wealth generating business.
Here are specific instructions for the first report above, A) Profit & Loss By Month For The Current Year:
Go to Reports in the QuickBooks menu; go to Company & Financial; choose Profit & Loss Standard. Go to Customize Report in the Report menu. In the Display tab, choose the Report Date Range as From: 1/1/15 to 11/30/15. (This ending date should be the last month when all bank and credit card accounts are reconciled.) Next choose the report basis of your choice: accrual or cash. In the Columns section, choose display columns by month. Click OK. You can now shrink the columns if desired. I suggest you now memorize this formatted report and name it P&L to Date by Month.
You can now analyze your monthly expenses (and income) so far this year by comparing COGS and Expense accounts across months, looking for anomalies or trends. If you want to further explore a total in an account by month or year end, simply place your cursor over the amount and when you see the magnifying glass, double click to zoom in to see the detail in that total.
Now you can easily expand the previous report to create B) Profit & Loss Report By Month Compared To The Previous Year’s Months. Go to Customize Report; in the Display tab under the Columns section, check the boxes: Previous Year along with the $ and % changes. Click OK.
One more modification will create C) Profit & Loss Report By Year Compared To Last Year. Go to Customize Report. In the columns section, choose Display By Year or another option: while on the report page, in the Show Columns window on the Report menu, change Month to Year.
Those are just a few examples of reports that allow you to compare and monitor your expenses. Don’t be afraid to play around with report options to create the perfect management reports for your business!