As we discussed in our previous movie, QuickBooks organizes your financial information into accurate reports that you will use to guide your business in a profitable direction. One of the most important financial reports an accounting system produces is the income statement, which is also known as a profit and loss statement. The income statement summarizes a company's revenue and expense for a specific period of time and will let you know if your company is making or losing money. Which I am sure I don't have to tell you is important for you to keep track of. It will also track the profitability of the products you are selling by showing the costs associates with the products you sell, in addition to the revenue they earned.
Revenue is the money you earn by selling and providing products and services to your clients. Expenses represent the money you spend on products and services to run your business. OK, let's look at an example of a simple income statement. At the top is listed the name of the company, the type of report, and the specific period of time that is being reported. As I mentioned, an income statement reports revenue and expenses for a specific period of time, and in this case we're looking at the month of January 2008.
As you can see the income is listed at the top of the report. This represents our sales for the month of January. In addition to income, costs of goods sold and gross profit are also shown. By deducting the cost of goods sold from our income we are left with our gross profit. We're going to be covering costs of goods sold and gross profit in greater detail in the next movie. On the second half of the report shows our company's expenses. If we want to know how much money we made for the period, We simply deduct the total expenses from the gross profit.
If our gross profit exceeds our total expenses then we made many and retained a net profit. Now, what would happen if we had a bad month? If our sales drop and our total expenses are greater than our gross profit, then we lose money and our business suffers a loss. Remember, the purpose of an income statement is to keep track of your revenue and expenses for a particular period so that you will know if you're making or losing money. You can prepare income statements annually, monthly, quarterly, or even daily.
I recommend for most companies you generate monthly statements. I find it very helpful to review revenue and expenses on a regular basis. This will help you spot trends in your spending and sales that you can then use to help guide your business in a profitable direction. We will look at a standard income statement in QuickBooks later on in this title. But to find the report in QuickBooks, go to Reports on the Menu bar, select Company and Financial, and then choose either your Standard or Detail Profit and Loss Statement.
Author
Released
1/18/2008Note: QuickBooks Pro 2008 is not currently available for the Mac. If you are a Mac user you will be unable to open the exercise files for this tutorial, however you will still be able to watch the movies.
- Working with the Chart of Accounts feature
- Setting up items
- Tracking inventory items
- Using the Customer Center
- Invoicing customers
- Making client sales receipts
- Applying discounts and credits
- Entering and paying vendor bills
Skill Level Beginner
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1. Introduction
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Welcome1m 2s
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Understanding QuickBooks Pro1m 37s
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A word of warning1m 22s
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Using the exercise files2m 2s
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2. Basic Accounting Principles
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Using a balance sheet6m 24s
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3. The Easy Step Interview
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4. Understanding the QuickBooks Environment
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Using the home page5m 15s
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5. Chart of Accounts
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Creating an account4m 37s
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Creating a sub-account3m 46s
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Editing an account3m 20s
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6. Setting Up Items
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Understanding the Items list1m 28s
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Adding an inventory item8m 15s
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Adding a non-inventory item2m 44s
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Adding service items2m 27s
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Adding other charges1m 18s
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Adding sub-items3m 44s
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7. Sales Tax
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Setting up sales tax items3m 17s
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Setting up sales tax codes2m 38s
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8. Customer Information
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Using the Customer Center4m 46s
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Adding a new customer13m 9s
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Adding a new job4m 14s
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Merging customers2m 41s
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9. Invoicing Customers
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Creating an invoice6m 14s
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Using invoice templates4m 38s
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Printing invoices3m 55s
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Emailing invoices2m 43s
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Voiding invoices1m 52s
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Using Credit Memos5m 15s
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Creating client statements6m 23s
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Assessing finance charge6m 10s
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10. Customer Payments
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Making client sales receipts3m 38s
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Receiving payments3m 46s
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Making a deposit5m 34s
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Refunding clients3m 21s
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11. Vendor Information
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Using the Vendor Center5m 48s
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Adding a new vendor2m 28s
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Opening balance3m 12s
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12. Entering Vendor Bills
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Entering bills8m 15s
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Crediting a bill2m 45s
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Merging vendors4m 1s
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13. Paying Vendor Bills
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Paying a bill8m 19s
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Assigning check numbers1m 48s
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14. Using Purchase Orders
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Creating a purchase order5m 19s
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Receiving items3m 49s
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15. Understanding Preset Reports
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16. Working with Reports
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Modifying a report8m 24s
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Memorizing a report3m 15s
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Exporting reports to Excel4m 40s
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Printing reports33s
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17. Additional Information
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Paying sales tax6m 6s
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18. Pitfalls
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Conclusion
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Using additional resources1m 32s
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Goodbye15s
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Video: Creating an income statement