QuickBooks Pro Plus desktop 2022 Comparative Profit and Loss p&l or income statement, get ready because we bookkeeping pros are moving up the hilltop with QuickBooks Pro Plus desktop 2022. Here we are in our free QuickBooks sample file sample Rockcastle construction going through the setup process with the view drop down the open windows list on the left hand side, that company dropped down home page in the middle, maximising it to the gray area, we’re going to be looking at the income statement and creating from the standard income statement, a comparative income statement, noting that QuickBooks does have some default comparative income statement or profit and loss statements available.
00:44
However, they have created them. In essence with tools that we have available to us. If we can understand the tools, we can put together our own kind of comparative statements and have a lot more flexibility with it. Let me show you what I’m talking about here, we’re going to go to the reports drop down up top, you could open the income statement by going to the Report Center, you might have it possibly in memorized area, you could have it in your favorite reports, but we’re going down to the default settings, company and financial.
01:12
Ultimately, I’m going to be opening up the profit and loss standard. But just note the other variants of the profit and loss type of reports that we have one of them being a profit and loss. Previous Year comparison, comparing the current year to a previous year comparison, that is a comparative type of report that can be built from a standard profit and loss. If you know how it is done, then you can do other comparisons such as a month by month comparison, for example, have a lot more flexibility, we want to know the tools. So we’re going to start off with our profit and loss standard.
01:47
Once built, you then have the option to save your profit and loss standard. To memorize it. For example, let’s go up top and say we’re going to go to the Customize reports changing the font to 14 fonts and numbers change the font down below, bringing it on up to 14 for font sake. Okay, we’re going to say yes. And okay, so there’s our fall at 14. Closing, I’m going to close the window on the left hand side. Now I’m going to assume that we have the three months have now passed. So first quarter.
02:20
So first thing I’m going to do is change the date range up top remembering that the income statement as we do this comparison will look different, in some ways from the balance sheet, due to the fact that we have a cumulative upward type of report that we’re talking about as opposed to a point in time meaning these numbers down here represent the activity that have happened in this case, for the time period of 12, one to 1215. And instead of a balance sheet, which is showing us where we stand at the end of the end date.
02:52
So in other words, if I change this date range from O one, and notice how I’m typing this in as well, this is the fastest way to type in I believe, if I say, Oh 10123 Without any dashes or anything, and then tab, it populates the proper date, I’m going to take that out 203 31 233 30 123 tab populates 331 2023. Now, of course, we have different numbers, these numbers representing the income that have accumulated up from January 1 to march 31, the three month time period for income and losses.
03:27
When we’re looking at our comparison, then we’re comparison, we’re comparing activity, you know, kind of like that that car scenario, how long, how far can a car drive in an hour, we’re trying to see how much revenue can go up in a month, versus how much revenue can be generated, you know, in another month. So we’re gonna do a comparison side by side and assume it’s going to be for the March 31 versus the February month. Before we do that, however, just note, first way we can kind of do a comparative type of report. And another report that you might provide, if you were say we’re in the first quarter would be to break this out by month.
04:04
And that would be easily done enough, we could say instead of showing the totals, I want to show the month by month breakout right here. And that gives us January, February and March these than showing us the activity how much general how much revenue we’ve generated, how much expense we’ve incurred for January, February and March. And notice it gives us a total column, something we didn’t have when we did this on the balance sheet side, because the total of saying this is how we did for the sum of the time period January, February and March.
04:36
That doesn’t make sense if we’re looking at the balance sheet, because that would tell us where we stood at a point in time in terms of how much we had cash we had at the end of January at the end of February at the end of March. So this would total it up. This is a nice report to have, because it gives us that comparison between the three months. However possibly we want a month by month comparison, comparing the latest month which is March to the prior month of February. And then looking at the change the difference between the two the performance on one month versus the performance on the other net month, and possibly a percentage change as well.
05:13
To do that, we’re going to use basically a different technique, we’re going to go up top and customize the reports, this is similar to what we did on the balance sheet. And I’m going to change the date range up top to be the month that we want to be in, which is going to be I’m going to say this is going to go from Oh 301 to three. So for the March, the month of March,
05:35
and then down below, I’m going to keep it on month to note that if you do have it on something other than months like that, like total or something like that, then you might end up with a comparison, if you say I want the previous comparison, that it could say that it’s going to compare to the prior 31 days, we don’t want to compare it to the prior 31 days, we want to compare it to the prior period, which is going to be like 28 days because the prior period being the month, so
06:01
So if you run into kind of a problem where it tries to compare days 31 to 31, then you might then try to change this item here to say month. And that might be more of a problem in the prior versions of the software that you could run into I believe it’s possible in any case, so we’re going to go down below. And I’m going to say I want to see the previous period this time. So now I’ve got the current month. And I want to look at the prior month, which is going to be February, and it should give me that side by side comparison.
06:27
So I’m going to say okay, so now we have it and now the current month is on the left, and the previous month is on the right, notice this kind of comparison, you can only really compare two months here, when you’re looking at fish, you’re looking at a side by side, and then the change between the two of them. Whereas the other one, we can compare basically multiple periods, we could say three months, we could say the entire year, and so on and so forth.
06:51
So now we’ve got the side by side comparison, that is nice. Next thing we would want to do is is of course possibly have the difference between the two. So now I don’t want to sum them up to show how much we generated over the two month time period, as we saw on the prior report, but instead, take the difference between the two of them to see how good of performance we had in the current month versus the prior month. So to do that, we’ll go back up to the Customize Report.
07:17
And of course, we’ll just say I want to show the dollar change, please. And that gives us $1 Change column, which is simply taking the current month, minus the previous month. And now we’ve got the dollar change for us. And we could do our comparisons and try to say, hey, where did we do good? Where
07:32
did we do bad? Where can we where did we improve? Where did we not improve and so on noting that, if I was to compare our change how we did last month compared to this month, to other companies, for example, that are basically have possibly bigger dollar amounts than us because we’re trying to benchmark to them to copy their procedures, this dollar change doesn’t do enough for us. And even when we’re analyzing our own books, we might have a better easier convention of using percent changes. So we got to get into those percent changes again.
08:07
So I’m going to go to the Customize is like a horizontal type of analysis as opposed to a vertical analysis, we’re going to go to the percent change now and say, okay, and now we’ve got those percent changes, which can be intimidating to some people to have the ratios. But they’re important because these are these are the types of things that we can compare more easily to other types of companies and benchmark it out. And they’re used, they have to be used if you’re going to make any kind of fair comparison between between different people that are that are doing work doing performance,
08:40
job related work, whether it be financial related, or performance work in any kind of industries, you got to kind of use percentages in some way. Because it’s the only fair way to do it. Although you can lie with percentages just like you can with words. And it’s more difficult oftentimes for people to pick up the lines with percentages, which gives percentages a bad name, but it’s really the manipulation or misuse of people using the percentages and not the person. It’s not the percentages fault, just like it’s not the words for Okay, so how do you calculate it.
09:11
So now we’re going to say that we’ve got the current period minus the prior period and the change so that calculation straightforward. For the income line item, we say 330 Minus the 3150, we got a difference of the 150. We take that difference and divide it by the prior period. So divided by the prior period, the 3150. And if we move the decimal two places over 4%, we get about 4.8%. So this first one, we’re going to say it’s a 4.8% increase that percentage increase, we can compare it to a large construction company and say they make a lot more money than we do. But is it true that their design income has gone up by a 4.8%? We could do the same for the total of course here.
09:55
We could say that we have the 255 for 1.25 minus two 24847, that’s going to give us the 694 25. If I take that divided by the prior month, which is the 24847, that’s going to give us moving the decimal two places over the 2.8%. So we have our 2.8%. Again, that then being something that we could compare to other companies that possibly are larger than us, people were looking up to people were copying, people were trying to get revenues like they got and say,
10:26
Did their income go up by that percentages? Are we moving along? Or we can compare it to say, industry standards, for example, and say, you know, the industry standard, if we measure the whole industry, as if it was one company, are we moving along kind of in in the same way, as the industry standard percentages allow us to do that, it’s only a glimpse, it’s one kind of glimpse, it’s one angle one view. But that’s useful to you. This is a horizontal type of analysis, meaning we’re comparing horizontal as opposed to like a vertical type of analysis that we’re using here, we could do the same thing, of course, all the way down for the expenses and try to look at the changes and the expenses.
11:06
We also might be looking at large kind of changes here. We might say, hey, look, anything over say 10%, I want to drill down on if it’s if it’s a percent change over 10%, that might be a convention that we’re going to go I’m going to look into that and say what happened here? How’s it How’s it possible that I had a percent change that of that, of that size? Or over a certain point? So like the loan interest? Well, did I take out a new loan, that seems ridiculous my loan interest when I bet, hopefully, I got more money. And so it right, it’s obviously if it’s 100%, you know, difference here that we had that substantial change in the taxes that took place.
11:43
And these, this is kind of interesting, because there’s a cap on the taxes. So that’s actually, I won’t get into why but that could possibly be the case. And then equipment repairs, and so on. So you can you could take a look at the percent changes that are large percent changes, and it might be a better indicator than simply the dollar amount in some cases. All right, let’s do our formatting, then you can format these. Note that this report now, the profit and loss doesn’t really doesn’t really tell us what we want. It’s more of a comparative income statement.
12:11
You might call it a comparative profit and loss. But you can also change the name if you want to an income statement if you want, because some some people might like that. And again, it might make you stand out from other people that are using similar reports. If you’re working and you try to make your reports a little bit more customized, we can remove the items on the left hand side, we don’t really need this date right there. That date doesn’t really make sense.
12:34
Given the fact that we now have three months instead of one month, we can remove that we can remove the pennies if we want, we can move the negative numbers, make them bracketed, and possibly red, so those negative changes will stand out to us. And we can put our name in the footer and all that kind of stuff, remove this stuff on the left, let’s do it. customized report, we’re going to say that looks good. Everything’s good here. I’m going to go to the to the headers and footers.
12:59
And I’m going to say Castle Rock Castle construction that looks good. I’m going to change the name that I’m not going to call it a profit and loss, but instead a comparative income statement. I wish these cells had spell checks in them. But whatever. If I spell it wrong, you should double check your spelling. And then we’re gonna say that the subtitle is going to be no subtitle, I don’t want a subtitle, because the dates are right there. So you don’t really need a subtitle.
13:28
It’s redundant. It’s redundant. And redundant is dumb didn’t. So then we’re going to say that the date prepared, remove time prepared, and report basis. And then on the footer, I’m going to put my name, my name this time. So there we have that that looks good, then on the fonts and numbers side of things, we might we might, you know, I’m just going to do the normal justice, I’m going to put the parentheses around the negative numbers, make them red, and remove the pennies because you don’t usually need the pennies for the decision making process and it kind of cleans things up a lot to get those out of the way.
14:03
So I’m going to say okay, looks way better, way better. So now we’ve got those negative numbers standing out those big Negative percentages jumping out at us and we can then drill down on that information and see what there is that we want to do about it. Once you once you have your report set up. Then you can memorize the reports and we’ll do this more in a future presentation talk about how to memorize these other reports. Put them in your saved folder, and then you don’t have to reformat them. You can simply change the dates to the appropriate dates.