MAKING MORE EFFECTIVE DECISIONS WITH QUICKBOOKS REPORTS
By Libby Smith, QuickBooks Professional Advisor, Accounting for Success, PC
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QuickBooks reports can deliver information from the very general to the very specific. And you’re the person who controls that level of detail. On one hand, it’s as simple as selecting the proper report from the list of reports. On the other hand, it’s as complex as “beginning with the end in mind” to set clear parameters, and make preparations, for the reports you want to use to make effective decisions in your business.
In the very general category, are the basic reports for the Balance Sheet, Profit and Loss, and Statement of Cash Flows. These reports use the simplest level of reporting, which is at the Chart of Accounts, and General Ledger levels. The data that is used for the reports requires you to designate the proper Chart of Account numbers for transactions, which then causes the data associated with each Chart of Account number to flow into the three financial reports.
To create Job Costing reports, you need to set up sub Customers, called Jobs. Each time a sales invoice is prepared, you select not only the customer to be invoiced, but also a specific Job you performed for that customer. Likewise, you select that same Customer and Job for purchases. Putting in this level of information allows you to print a Profit and Loss by Job.
The next more detailed level of reporting is to show you the Profit and Loss by Class. Class is QuickBooks name for departments. As an example, if you owned a four-unit apartment building and wanted to know the profitability by each unit, you would set up a Class for each one. Then, besides recording the income and expense Chart of Account information for each transaction, you would also designate a Class for each one. The result is a report called the Profit and Loss by Class.
At the most detailed level is a report called the Profit and Loss by Item. This report shows you how profitable each Item is you sell to your customers. And that’s true for service, non-inventory, and inventory items. When you prepare a sales invoice for your customer, you identify the item that’s being sold. And when you prepare a vendor bill, or write a check for a purchase, you use the same specific service or item that you used for the sale.
Think about what level of reporting would help you make better decisions in your business. Weigh out the advantages of having that information against the additional work it will take to enter transactions at that level. My best advice is to keep it as simple as possible while getting the level of detail that will help you run your business well. If you get it too complex, you’ll likely not enter the data consistently. And without consistency, the reports won’t be accurate, or valuable.
I teach a QuickBooks for Entrepreneurs class each month at my office near I-25 and Dry Creek. It’s a safe place where the only dumb question is the one you don’t ask. Check out the Accounting for Success website at www.a4s.com for the monthly schedule. If you have questions, or need help in the meantime, give me a call at my office, 303-799-9111, x-220.
Author Credit: Libby Smith, Accounting for Success, 303-799-9111, x-220. |
