Often transactions are lumped into the "Misc. Income" account because it is an easy catch- all for unusual income. However, it dilutes the accuracy of your reporting. By reapplying "Misc. Income" transactions to the correct accounts, you get a better reflection of your business income.

In the Profit and Loss report below, we see miscellaneous income of $225.00. This does not tell me specifically where the money came from.

The "Misc. Income" amount appears on the Profit and Loss report because deposits have been applied to a "Misc. Income" account that is listed in the Chart of Accounts. In order to correct this, you should review where the money that was deposited came from.

Tip: It is not necessary to create an account called "Income" and enter the other income accounts as subaccounts of "Income". The income accounts will be listed on your Profit and Loss report under "Income" anyway.

Procedure:

1) Generate a Profit and Loss report for the current fiscal year.

2) QuickZoom into the "Misc. Income " account transactions in your Profit and Loss report. Refer to page 14 for the procedure to edit transactions. You can also see the detail by doing a QuickReport in your Chart of Accounts. (Make sure you select the correct date range.)

3) Your deposit will open up like below. Methodically, one by one, QuickZoom onto each deposit and edit it.

4) Your deposit should be reapplied to the correct account. In this example, a deposit from a Line of Credit is posted to "Misc. Income" instead of a Line of Credit account. It is not income at all. If there is no "Line of Credit" account in the Chart of Accounts, you need to create a new one as a current liability account.

5) After you reapply the deposit to the correct account, QuickZoom into the next transaction in your Transaction Detail report.

6) The deposit opens up like this. In this example, the money came from a vendor
as a refund on an overpayment. It is not income at all. It should be applied to the "Telephone Long Distance"expense account . In other words, the original transaction should be reversed.

7) After you have emptied the transactions from the "Misc. Income" account by reapplying them, hide or delete the "Misc. Income" account from your Chart of Accounts. There is less chance of transactions being applied to this "catch-all" account if it does not appear on the Chart of Accounts.

Often transactions that are applied as "Misc. Income" are not income at all. By reapplying these transactions, you will not show profit or income that is not there.

Tip: Refund checks from vendors are not miscellaneous or uncategorized income. They should be entered in your bank deposits to reverse the original expense.