In theory, the sales reports should tally up to the relevant values on the income statement, if filtered correctly.
This article discusses common issues which may result in a discrepancy between the sales reports and the income statement.
- Is the sales report being filtered by tax date?
The tax date is used on the income statement, so should also be used to filter the sales report.
- Is the net figure on the sales report being compared?
Only the net value of sales (the value excluding tax) is posted to the income statement. Ensure you are comparing the total net figure.
- Is the sales report displaying base currency values?
The income statement will use the base currency values, so make sure the figure you are comparing from the sales report is also in base currency.
- Is the sales report being filtered to only display invoiced sales?
Only invoiced sales post to the income statement, so any non-invoiced orders should be excluded from the sales report.
The best way to do this is to use the 'Invoiced: Yes' filter - order status is not as reliable.
- Are all rows on all sales posting to a revenue code (i.e. are there any posting to gift card codes, or another non-sale code)?
The net value of all sales, regardless of what code they’re posting to, will be displayed on the sales report!
- Is the sales report filtered to display both sales and credits?
Both sales and credits post to the income statement.
- Are there any quick invoices/credits, bank receipts/payments or manual journals posting to the revenue codes?
Any of the above will affect the value on the income statement, but won't be included on the sales report.
Cost is harder to reconcile to the income statement because there may be timing discrepancies if certain settings are enabled, and because the cost of sales codes are used for things besides goods out notes, but the following are some things that can be checked:
- Do you have deferred cost of sales/use invoice date for posting date enabled under Settings > Company > Accounting: Options?
In the accounts, cost of sales entries are posted when a sale is shipped. This can be a different date to the invoice date, but you can only filter sales reports by invoice date! If the above settings aren’t enabled, the cost of sales may be posting to a different period.
- Are you filtering for shipped sales only?
All sales will show up on the sales reports by default, but only shipped sales post to the income statement. (The cost for unshipped sales will appear on the sales report as an estimate based on the cost price list assigned to the sale.)
- Are there any sales credits which are unreceived or have been written off?
Credits will only affect cost of sales if they’re received, and you can’t filter by received credits. Therefore if you have any unreceived credits (or write-offs) in the account, that will skew the sales reports.
The point about dates also applies (the sales reports will not show what date something is received in at).
- What code do inventory adjustments go to?
By default, inventory adjustments use the cost of sales code, so any adjustments may be skewing the income statement. Check which code is being used under Settings > Company > Accounting: accounts (nominal codes).
- Are there any purchase price corrections?
When items are received at one price and invoiced at another, the difference is posted to the cost of sales code. If this has happened, it may be skewing the income statement.
You can any such entries by going into the general ledger, exporting, and filtering for all rows that have an invoice reference which doesn’t start with 'SI-'.
- Were any of the sales fulfilled via drop-ship purchase order?
If they were, the cost of the products gets posted to the invoice date of the purchase order. This could be in a different period to the sale.
- Are there any non-stock tracked items with cost prices present on sales?
These don’t post to the accounts but could be increasing the cost on the sales report.
- Are there any quick invoices/credits, bank receipts/payments or manual journals posting to the cost of sales code?
As with revenue, all of the above will affect the value on the income statement but not the sales report.