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Direct Expenses in P&L

#1

Under the chart of accounts the direct expenses are listed separately but when the P&L is run they are listed under overheads. However, this distorts the Gross Profit figure as the Cost of Sales is not including direct expenses.
Is there a way to amend the format of the P&L so that it shows Turnover less Cost of Sales less Direct Expenses = Gross Profit?

Thank You

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#2

Hi @Bookkeeperkat

There isn’t a way to reclassify the already existing nominal codes, but you’re welcome to create new ones in the relevant categories that you wish.

If you’ve already used nominals and need to update previous invoices, you can also use the bulk re-code tool to move these. Simply view the original nominal code, and the option will appear at the top of the screen for you.

Please let us know if you need any help with these

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#3

We have created new nominal codes in the 6000 to 6999 range (listed as Direct Expenses) and would have expected them to appear in the ‘Cost of Sales’ or Direct Expenses section of the P&L but they’re still included in the Overheads section.

I would like to count Direct Labour and associated costs into the cost of sales (Direct or Variable) cost section of the report.
From @Bookkeeperkat 's submission above, the only option currently appears to be creating a new P&L report?

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#4

Cost of Goods sold is in the range of 5000-5999. If you’d like these items to appear under the COGs section of the P&L they would need to be either re-coded or journalled to a nominal code in that range.

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#5

Thanks for the quick reply @Glenn

I’m a bit puzzled by the terminology … I would have thought that ‘Direct’ intimates that it is a cost associated directly with sales… hence the name. Most of my career has been in the manufacturing industry where ‘direct labour’ is a cost of sale i.e. a direct cost or a variable cost for where labour is applied to material. I am now involved in retail but still consider that labour associated with the sales floor is a ‘direct cost’ i.e. if sales increase we are likely to increase this labour cost and vice versa. The associated costs NI, Emp.NI, PAYE and deductions various would also appear before the Gross Margin split.

As I suggested in my previous post the only option other than those you suggest is to recreate the P&L as a custom report with all of the Direct costs associated with sales above the line?

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#6

Technically it wouldn’t be difficult for us to add an option so that the direct expenses are rolled into COGs on the P&L. It would need to be an optional account level setting as we’ve used this P&L format from day one and this change would most likely not suit all users.

For now I will make a not on our short term planner for this to be reviewed in more detail.

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#7

Thanks Glenn,
Again I appreciate the swift response… it would be great if it becomes available as an option. I appreciate not everyone would view the P&L in this way (it surprises me but … )

I’ve attached a table below of the way I would have expected or would like to see the P&L structured…

I’ve had a bit of a ‘play’ with the ‘Create Report’ function but that seems to be more for graphs & charts than an ability to create a P&L lookalike report … is that right?

Cheers
Pete

Period Year to Date
Sales
Product Sales 1493687.81 1493687.81
Other Income 26905.19
1520593.00 1493687.81
Purchases
Purchases 847328.39 847328.39
Purchase Charges 554.22 554.22
847882.61 847882.61
Direct Expenses
Sales Promotion 870.00 870.00
Miscellaneous Expenses 643.07 643.07
Direct Wages
1513.07 1513.07
Gross Profit/(Loss): 671197.32 644292.13
Overheads
Wages & Salaries
Rent and Rates 53037.29 53037.29
Heat, Light and Power 19044.08 19044.08
Motor Expenses 1175.41 1175.41
Printing and Stationery 1673.08 1673.08
Telephone and Computer charges 9161.23 9161.23
Professional Fees 26224.82 26224.82
Equipment Hire and Rental 630.52 630.52
Maintenance 14813.84 14813.84
General Expenses -612.73 -612.73
Suspense & Mispostings 181381.63 181381.63
306529.17 306529.17
Net Profit/(Loss): 364668.15 337762.96

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#8

@Pete_Bumstead - do you have a Power User Subscription? If so, you may find the segmented profit and loss report easier as this can show you a period view side by side (e.g. quarters or year-by-year). This can be access under the Reports menu, and then by selecting “All Reports”

That’s pretty much correct. It’s limited in what it can do, but generally it can be used for adding and subtracting various nominal code values and generating both the graph and the table.

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#9

Hi @QFMathew

Thanks for the reply…

Yes I am a Power User but not yet enough info to get the benefit from the segmented report… we only started with Quickfile in Feb and so are still entering data; but yes will use that once we’re fully functional… again with the report creator, once we have some meanigful data input we can start to test that out.

Cheers
Pete

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#12

Hello

@Bookkeeperkat @Pete_Bumstead

We have now introduced an account level setting that will merge the direct expenses into the Cost of Sales section on the P&L. You can enable this in Account Settings >> Advanced Features.

Before:

After:

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#13

Hi @Glenn

That’s great… thank you very much! Impressed with the speed of the update!

Implemented works a treat. Great feature.

Much appreciated

Pete

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#14

That’s great to hear, thanks for letting us know.

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#15

How did i miss this?!! I suppose i don’t do any ‘management reporting’ and most of the times just pick the figures from QF P&L and type them into the accounts production software that I use to file at CH.

Thanks Glenn for the update.

The accounts production software categorises COS as follows:

Cost of sales:

Purchases
Increase/decrease in stocks
Subcontractor costs
Direct labour
Carriage
Discounts allowed
Commissions payable
Other direct costs

p.s I didn’t see a formal email to notify users of this update. I just happen to see the post in the forum.
it will be good if users are notified of this change formally as not many users read the forum in their spare time :stuck_out_tongue_closed_eyes:

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