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How To Run A Profit And Loss Statement In QuickBooks Online 2016 - YouTube
Channel: FitSmallBusiness
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welcome to the fit small business
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quickbooks online training course in
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this lesson we're going to cover how to
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run a profit and loss statement in
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quickbooks online to follow along with
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me
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login to your quickbooks online account
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now or click the link below for a free
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30-day trial of quickbooks online you
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can also click this link to access our
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full quickbooks online course and other
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helpful resources let's get started the
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profit and loss statement provides a
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summary of your revenue minus expenses
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for a specific period of time such as a
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month a quarter or a year it tells you
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your bottom-line net profit or loss you
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may have heard the statement referred to
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by other names such as P&L income
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statement statement of earnings and
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statement of operations it's important
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to understand if you are making money or
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losing money and why I don't know anyone
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who is in business to lose money however
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if you are losing money then you want to
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quickly understand why so that you can
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turn things around
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I recommend the profit and loss
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statement at least on a monthly basis so
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you can review revenue and expense
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trends and know where you stand from a
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profitability standpoint to help
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demonstrate the components of the profit
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and loss statement we will use a
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fictitious company Paul's plumbing below
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I have identified four sections of the
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profit and loss statement for Paul's
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plumbing this profit and loss statement
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is for the period January 1st through
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September 29 2016 section 1 shows the
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revenue earned from the sale of products
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and services for this designated time
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period
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pause plumbing had a total revenue of
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six thousand two hundred and fifty nine
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dollars section two shows the cost of
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producing all the products sold cost of
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goods sold and the gross profit which is
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the difference between the revenue and
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the cost of goods sold
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Paul's plumbing had a total cost of
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goods sold of one thousand seven hundred
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and fifty dollars for the designated
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time period total revenue section one
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was six thousand two hundred and fifty
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nine dollars the difference between
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total revenue and cost of goods sold is
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the gross profit
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of 4509 dollars gross profit represents
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the profit before operating expenses are
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subtracted typically if you do not carry
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an inventory then you will not have cost
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of goods sold on your profit and loss
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statement section 3 shows the expenses
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the business has incurred such as
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advertising costs
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paul's plumbing had total expenses of two
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thousand eight hundred eight dollars and
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forty seven cents and finally section
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four this section shows the business's
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net income sometimes refer to as the
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bottom line it is the difference between
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the total revenue section one and total
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expenses section three paul's Plumbing
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has a net income of two thousand two
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hundred dollars and fifty three cents if
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revenue exceeds expenses then the bottom
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line will be a positive number which
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means that the business was profitable
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for the specified time period that is
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the case here for Paul's plumbing and it
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is what every business strives for
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however if you are in business long
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enough you could have a result where
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your expenses exceed your revenue which
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will result in a negative bottom line or
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a net loss at the end of the video I
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will provide you with some valuable
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action items to help you further analyze
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your income and expenses you can run a
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profit and loss statement in quickbooks
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online in under two minutes
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first from the home page click on the
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reports option located on the Left menu
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bar the profit and loss statement is a
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very first report located under the
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recommended reports tab from this screen
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we have several options to choose from
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starting with the print button you have
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the ability to print this report you
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also have the option to email this
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report to anyone that you would like to
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review it for example an accountant or a
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tax professional the export button
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allows you to export this report to
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excel where you could make notes and do
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further analysis the customize button
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allows you to customize a number of
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areas of the report including general
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information like date range report basis
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also it allows you to control how many
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columns you can see the one column or
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multiple columns for each month it
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allows you to change the header or
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footer information and also to format
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numbers the collapse button you can use
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the collapse button if you actually have
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sub accounts on the report this button
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allows you to hide that level of detail
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if you so choose save customizations
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allows you to save any custom changes
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that you have made to the report so that
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you can use them again transaction date
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you have the option to select the time
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period that you would like to run the
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report for you have two ways of doing
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this the first feel if you click the
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drop-down gives you specified time
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periods that quickbooks has set up
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already so you can select one of these
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or you can actually type in the specific
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date that you'd like to run the report
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for after you've done that you can just
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click the run report button and you've
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got the report that you wanted to the
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far right you'll notice the basis has
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been indicated for the report in our
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report it says cash basis so basically
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there are two options for basis cash
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basis or accrual basis accounting most
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of all businesses use cash basis
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accounting because it is simpler than
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accrual if you're not sure which method
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you should use ask your accountant and
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click here to read more about these two
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accounting methods in our article small
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business accounting accrual versus cash
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in order to solidify how what you do in
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QuickBooks will impact your financial
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statements let's walk through a common
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business transaction for paul's plumbing
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to see how it will impact his profit and
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loss statement so Paul has created an
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invoice for one of his customers so we
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will go ahead and navigate to the
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customer center by clicking on customers
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on the left hand side we'll go ahead and
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scroll down and display this invoice we
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just created
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the invoice that was created is for
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plumbing services the total amount of
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the invoice is five hundred dollars so
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we're going to go ahead and receive
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payment against this invoice and the how
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to receive payments lesson we walk
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through step by step how did we see
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payments and apply them to open invoices
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click here to watch this video tutorial
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so we'll go ahead and click receive
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payment here and we'll just designate
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the payment method and then we can save
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this transaction now let's take a look
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at the impact creating an invoice in
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receiving a payment has on Paul's profit
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and loss statement there are four counts
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that have been impacted by these
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transactions total income gross profit
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net operating income and net income on
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the left-hand side of your screen we've
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got the profit and loss statement before
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those transactions were created and on
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the right hand side we've got the profit
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and loss statement after those
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transactions were created so starting
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with total income total income before
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was six thousand two hundred and fifty
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nine dollars that has increased by five
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hundred dollars to six thousand seven
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hundred and fifty nine dollars on the
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right gross profit before was four
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thousand five hundred nine dollars and
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now gross profit is five thousand nine
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dollars net operating income was
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seventeen hundred dollars and fifty
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three cents before and after those
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transactions were saved net operating
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income is two thousand two hundred
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dollars and fifty three cents and
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finally net income our bottom line was
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two thousand two hundred dollars and
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fifty three cents and it has increased
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by five hundred dollars to two thousand
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seven hundred dollars and fifty three
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cents if you are on the accrual basis of
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accounting the invoice will show up on
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the profit and loss statement after you
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create the invoice for those on the cash
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basis of account
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team you will have to complete both
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steps create the invoice and receive the
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payment as we just did to see any
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changes on your profit and loss
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statement for more information on cash
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versus accrual ask your accountant you
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can also click here to read our article
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on small business accounting or cruel
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versus cash you should now have a pretty
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good understanding of what the P&L
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statement is how to run a P&L in
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QuickBooks and how important it is to
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the overall success of your business
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here are a few processes that I
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recommend you put into place immediately
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be sure all income and expenses are
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entered into QuickBooks Online as often
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as possible at a minimum you want to do
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this each month review your profit and
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loss statements on a monthly basis
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investigate revenue and expense trends
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that you notice while reviewing your
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profit and loss statement for example
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ask yourself these questions is your
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revenue consistently going up or down
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each month if so why are there specific
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times during the year when revenue drops
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or spikes if so what is the reason for
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this is this normal similar you want to
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do the same thing for expenses are your
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expenses consistently going up or down
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each month if so why are there certain
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times during the year when your expenses
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go up or down if so why is that
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happening
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take action based on your findings be
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sure to share your P&L statement with
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your accountant and tax professional who
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can provide you with more guidance that
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wraps up the lesson on how to run a
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profit and loss statement in QuickBooks
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Online to access our full quickbooks
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online course or any of the other
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lessons in this series click this link
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you can also find a link below this
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video for a free 30-day trial of
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quickbooks online if you have feedback
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about this course or if you have any
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questions please leave a comment below
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also don't forget to subscribe
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