You are checking and fully reconciling all of your client's accounts at the end of her fiscal year. You run a Profit and Loss report and find that her profits are considerably higher than last year. When you share this with your client, she is surprised because she doesn't have much money in the bank and has not taken much money out of the business.

Why might the profits be overstated?

• Credit card expenses have been coded directly to a Chart of Account code instead of marking a supplier bill as paid

• Deposits have been coded directly to income accounts instead of Sales Receipts

• Sales Receipts have been entered instead of using Receive Payments
• Supplier bills have been entered against an expense account code instead of an item to track inventory.