How To Resolve The Balance Sheet Out Of Balance In Accrual Basis

How To Resolve The Balance Sheet Out Of Balance In Accrual Basis

If your balance sheet in accrual basis shows out of balance. It means the Amount of total assets is not equal to the sum of total liabilities and total equities (A = L + E).  Here in this article, we are discussing the solution the Balance Sheet out of balance in accrual basis.

The problem is generated because of these three reasons:

Important note

Test the Balance Sheet report

  • If the report is back in your balance then Change the report to Total by “Year.
  • If the report is back that you have to Log out and back into your Balance Sheet report and your QuickBooks file.
  • Find the explanation recurring balance sheet report, if out of balance some users.
  • You should backup your QuickBooks company file before trying the given solutions in this post.
  • If you have multiple computers set up to host QuickBooks files and working in a multi-user environment. it may cause damage to your file and your balance sheet may go out of balance. To solve this problem, you need to fix your data damage and use only one server computer for hosting.
  • The problem is fixed by given solution, read the steps carefully. In solution 1. Make sure to verify, rebuild and check the QBWIN logs before you proceed to Solutions 2 and 3.

Fix your Balance Sheet out of balance on accrual basis on the accrual basis by using given steps:

Solution 1: Use troubleshooting for basic data damage

  • Fix the data damage problem using troubleshoot
  • Identify the errors and Fix them by using qbwin.log.
  • Run the balance sheet and then check the Balance.

Solution 2: Correct the transactions that are the reason for Balance sheet out of balance

Step 1: Find the date when the Balance Sheet shows out of balance

  • Reports menu > choose Company & Financial > Balance Sheet Summary.
  • Select Customize Report.
  • After that Click on Display Tab:
  • Now rearrange the Report Basis (Cash or Accrual) whichever is out of balance.
  • After that choose the Date when the balance sheet goes out of balance year. (month, week and day)
Year
  • Select all from the From the Dates drop-down.
  • Now Choose the year from Display columns
  • Then click on OK.
  • To find the year, you have to compare the Total Assets and Total Liabilities.
Month
  • From the fields, enter the year where your balance sheet goes out of balance.
  • Choose Month from the Display columns.
  • Then click on OK.
  • To Find the month where the balance sheet goes out of balance, you have to compare the Total Assets and Total Liabilities.
Week
  • Enter the month that is out of balance from the fields.
  • Choose Week for the Display columns.
  • Choose OK.
  • To Find the week where the balance sheet goes out of balance, you have to compare the Total Assets and Total Liabilities.
Day
  • Enter the week that was found out of balance from the From and the fields.
  • Now Choose the day from Display columns.
  • Click On the Ok button.
  • To find the day where balance sheet found out of balance, you have to Compare the Total Assets and Total Liabilities.

Step 2: Find the responsible transaction for the issue

  1. Now you have the date, then you have to create a custom transaction Detail Report to identify the transactions that are responsible for the problem.
    • Reports menu > Select Custom Transaction Detail Report.
    • If The Modify Report window is not open automatically then Choose Customize Report and click on the Display Tap.
    • Type the date where your balance sheet was found out of balance in the form of the boxes, From Report Date Range. Example: From = 3/14/00 To = 3/14/00.
    • Select cash/accrual which is out of balance, under Report basis.
    • You need to unmark account, CLR split and also class if it present, from the columns box. It will make your report very easier to read. Select the Paid Amount Column if you see a cash-basis report.
    • Click on the OK button.
    • You can see the ending balance on this report as a is out of balance amount. If you want to see the transaction that is equal to the ending balance you need to Look down an Accrual report or the Paid Amount column. In the end, If you are viewing a single transaction who matches the ending balance, you need to go on steps 3.
  2. If you are still not seeing the transaction (s) that are out of balance amount, then you need to run the following reports.
Customer Report
  • Go to the Reports menu > Select Custom Reports > Transaction Detail.
  • If the Modify Report window no open automatically then Select Customize Report.
  • No Click on the Display Tab:
    • Set the Report Basis which one is out of balance. Choose either Cash or Accrual.
    • Set the date for the day where the balance sheet is out of balance.  
    • For Customer Set the Total by.
  • Click on the Filter Tab
    • Now Choose the Transaction From the Filters list.
    • Choose Multiple transaction > Invoice, Credit Memo and payment from the Filter detail information.
    • Now choose OK.

After applying this, If your total is the amount where the balance sheet was out of balance on that date, You need to find the customer who contains a non-zero Sub-total. This customer has damaged transactions.

If it is not the amount by where the balance sheet was out of balance on the date, You have to Add other transactions to the Transaction Type filter. Multiple times you have to add Journal Entries but you also have to add Checks.

Vendor Report
  • Go to the Reports menu > Choose Custom Reports > Transaction Detail.
  • If the Modify Report window no open automatically then Select Customize Report.
  • Click on the Display Tab:
    • Set the Report Basis which one is out of balance, Choose either Cash or Accrual.
    • Set the date for the day where the balance sheet is out of balance.  
    • For Vendor Set the Total by.
  • Now Click on the Filter Tab:
    • Choose Transaction Type From the Filters list.
    • Choose Multiple Transactions and then select Bill, Bill Credit and Bill Payment From the Filter detail information
    • Click on OK.

After applying this, If your total is the amount where the balance sheet was out of balance on that date, You need to find the Vendor who contains a non-zero sub-total. This Vendor has damaged transactions.transactions.

If it is not the amount by where the balance sheet was out of balance on the date, you have to Add other transactions to the Transaction Type filter. Multiple times you have to add Journal Entries but you also have to add Checks.

Journal Report
  • Go to the Reports menu > Choose Accountant and Taxes > Journal.
  • Choose Customize Report.
  • Click on the Display Tab:
    • Set the Report Basis for either Cash or Accrual, whichever one is out of balance.
    • Set the From and To date as the day that the balance sheet goes out of balance.
  • Select OK.

Note: If your Debit and Credit Totals will not match, That’s means you have the right date when Balance Sheet is out of balance. Now You have to search the transaction/s which shows that Debit total not matching with credit total. Or Under the account column, one of its accounts is empty. After that Select that that transaction, then deletes or recreate it.

Other transactions
  • Click on the Reports menu then Choose Custom Reports > Transaction Detail.
  • If the Modify Report window is not open automatically >Select Customize Report.
  • Click on the Display Tab:
    • Set the Report Basis for Cash.
    • From the Dates drop-down, choose All.
    • Set Total by to Account List.
    • Add the Item column.
  • Select OK.
  • Now Scroll Down to the bottom of the report.  Check the last group of the transaction, if it hasn’t any account or the account column is blank then there are no accounts assigned to these transactions. Now follow these:
    • Select Item List from the Lists menu.
    • Now right click on the item and select Edit Item from the Item List window.
    • Then change the Account and select OK.
    • Reopen the Edit Item window.
    • After that change the Account back to the original account.
    • and select OK.
  • You can repeat the steps e for every transaction on the above report that does not have an account.
  1. Decide if a Few types of the transaction is putting Balance Sheet out of Balance in Cash Basis. Here are Some of these transactions you have to look for are:
  • An inventory return and discount on an invoice
Possible Scenario Recommended Fix
  • If you sold one or more inventory items.
  • If the customer return of one or more inventory items.
  • You have a discount item
  • You have to create a new invoice for the sale and the discount.
  • Also, you can create a credit memo for the inventory return.
  • In Receive Payments, You have to Link the credit memo to the invoice.

 

A discount entered at the customer level and applied at the job level
Possible Scenario Recommended Fix
  • You have a customer with several jobs. And you complete all of the jobs and invoice the customer, including all jobs on the invoice.
  • You receive a payment for the invoice, but your customer includes a discount for Job A in the payment.
  • When you Enter the discount on the credit tab and enter/record the payment to the invoice.
  • Your cash basis balance sheet will be out of balance.
You have to re-enter the payment and crack open it among the job then enter discount at the job the level so it matches the invoice.

 

A journal entry linked to a credit memo
Possible Scenario Recommended Fix
When open Credit Memo and enter an offsetting General Journal Entry then you have linked it to the Credit Memo.
  • You have to Edit the journal entry.
  • And then Move the A/R account to the source line.
  • After Save the JGE and make sure that it is still linked to the Credit Memo.

 

A discount that offsets to a balance sheet account
Possible Scenario Recommended Fix
  • While record a discount and you use a balance sheet account to offset the discount.
You have to change the discount account to an income/ expense account. If your accountant gives you instruction to use a balance sheet account. And it is very important that you have to use cash basis reporting, you can use this workaround instead:

  • Offset the discount to an expense account.
  • You need to Create a journal entry which is moving from the expense account to the balance sheet account in the discount.

This will effectively post the discount to the balance sheet account while keeping your cash basis balance sheet in balance.

 

Unconventional inventory transactions

Possible Scenario

Recommended Fix

  • If you have the transactions that contrarily affect inventory Like as:
    • Transactions that drive your Quantity on Hand negative.
    • Transactions that change the Quantity on Hand for previously entered assemblies and cause the assemblies to be marked pending.
    • The transactions of the same items have the same price, Washing with (+) and (-) units
    • Transactions Which is used a damaged item, damaged customer, or damaged vendor.
  • It holds a  negative inventory that affects your Cash Basis Balance Sheet. If this is the case, you may run the basic data damage troubleshooting to bring your B/S into balance. In that case, when you re-enter inventory transactions, your B/S becomes out of balance again.
  • You have to correct your transactions which are the reason the B/S to be out of balance. But careful it may affect your financial statements for previous periods).
  • Start a new data file.

If the problem happens after upgrade your QuickBooks, then have to:

  • Reinstall the old version.
  • Restore the backup created before you upgrade the QuickBooks.
  • Prepare the restored data file for upgrade.
  • After that, you have to upgrade your data file to the new version.

If the transaction Shows to be damaged, or if the reason is the mismatch transactions without being one of the types of transactions listed above, then you need to delete and recreate the transaction.

Solution 3: You have to Check and resolve the data damage you cannot fix by usually troubleshoot.

If there is no reason found for transactions that the balance sheet to be out of balance, maybe there are some data damage you can’t fix with usual data damage troubleshooting. Here is some option for this type of data damage to fix. These options are rare and the steps to resolve them may be complex. So,  Make sure that you created a backup copy of the file before going through any of them.

Balance Sheet Summary is out of balance, Detail is in balance or vice versa.

Solution: you need to identify the damaged account and merge it into a new one

  • If there are the same basis and date range for both reports the maybe there is an account list damage.
  • Compare the reports and find the account which one has the differ balance on two reports.
  • After that, you have to merge the damaged account into a new account.

Note: You can only merge the same types of account. For eg., you cannot merge an income type account with another income type account.

  • Click on the Lists menu > Select Chart of Accounts.
  • Check out that the accounts you want to merge are the same Make sure the two accounts you want to merge are at the same hierarchical level on the list.
  • Now select the account you don’t want to use.
  • After that, at the bottom of the list > Select Account and then select Edit Account.
  • For matching the account types, you have to change the account name Before merging them.
  • Now Select Save & Close.
  • Select Yes to confirm that you are agreeing to merge the two accounts.

Your accrual Balance sheet is in balance for Dates is Equal to All Dates, but your B/S is out of balance for any other date range.

Solution: Find and repair damaged transactions.

  • Backup the QuickBooks company file
  • Click and go to the Lists menu > Choose Chart of Accounts after that Right-click the Uncategorized Expense account > Choose QuickReport.
  • Choose Customize Report.
  • After that Click on the Report Date Range and then Select All.
  • Now Click on the Filters tab.
  • Choose Posting Status by scroll down From the Filter box.
  • Now Select OK. You have to find a transaction with an amount, not with the item or account.
  • After that, Repair every transaction that you find.
  • Now Rerun the balance sheet report when verifying all reports if still unable to verify then Repeat Step 8 until you have verified each transaction.

If Your accrual Balance Sheet is out of balance but your cash Balance Sheet is in balance.

Solution: You need to identify damaged income or expense accounts with no transaction and merge them into a new account.

Negotiate the difference between assets and liabilities
  • Click on the Company & Finance > Balance sheet Standard, from the Reports menu,  
  • Click on Customize Report > For the accrual basis, click on the all dates from the date range.
  • After that Write down the difference between Assets and Liabilities & Equities.
You need to Locate the damaged account
  • First, you need to export your Chart of Accounts to your desktop.
  • Open the COA file in Microsoft Excel.
  • Now delete the first two rows of the spreadsheet after highlighting them
  • Delete Column G and higher after Highlight them
  • In Column F, Row 1 is OBAMOUNT.
  • To Highlight the entire spreadsheet you have to Select the cell above Row Header 1 and left of Column Header A.
  • Now you have to Sort the entire spreadsheet by Column F.
  • Search the row whose Column f amount is the amount from Step 3c1-4.
  • Be sure to write down the name of this account.
Fix the damaged account
  • You have to run a QuickReport for all dates on the account noted in step 3B-8 above In QuickBooks
  • Make sure If you are not viewing any transaction in it then this is the damaged account.
  • There should be no balance if there are no transactions.
  • Now you have to create a check for one cent to related account.
  • After that, you have to Run the basic data damage troubleshooting on the company data file.
  • Now Double click on the account for QuickZoom and delete the created check.
  • Run the accrual basis balance sheet to be sure it is in balance.

If your B/S is out of balance and the JE’s shows the amounts without associated accounts, After compressing your data. (applies to the US only).

The problem happens when you change the associated account on a payroll after it used on a paycheck and then you run the compress utility.

Solution: you need to correct these affected journal entries.

  • First, compressed your data and then you have to restore your company data file from the backup you made.
  • After that, create a Transactions List by Date report: choose Reports > Accountant & Taxes > Transactions List by Date.
  • Then Filter the transaction types report: Journal and All Dates.
  • You have to find the journal entries which is showing amount without the associated account by Scroll down
  • To make Journal Entries window, you have to double-click on the report entry to open it. Select the print icon from the top of the window to print the entry. (Optional)
  • Select Delete General Journal, from the Edit menu.
  • Now Select New journal and then re-enter the deleted journal entry which was deleted in previous steps, then enter the right account.
  • After that, click on the Save & New, and then you can repeat Steps 5 through 8 for the other affected Journal Entries.

If there is one column setting (e.g. Total Only) shows out of balance and other column settings (e.g., by Year) show in balance.

When you checking a balance sheet and total assets match with total liabilities and there is also equity in some column view but not in others. For eg., the report balances when you set columns to display Total only, but if you set the column to display by year the report does not balance. Maybe that happens because one or more of your accounts may be damaged.

Solution: You have to Identify the affected account and merge it into a new one account.

  • Find that which view of the report data is out of balance:
    • Go to the Reports menu > Select Company & Financial and then Choose Balance Sheet Summary.
    • Now Choose all from the Dates drop-down arrow.
    • To Display the balance sheet > Click on OK
    • Select total from the Columns drop-down arrow and note if total assets match total Liabilities & Equity.  
      • If the totals do not match in at least one column, note the column heading of the earliest instance where the totals do not match and continue with Step 2.
      • If the totals match, continue with Step 1.E.
    • From the Columns, drop-down arrow, choose Year and note whether TOTAL ASSETS match TOTAL LIABILITIES & EQUITY for all columns on the report.
    • If the totals do not match in at least one column, note the column heading of the earliest instance where the totals do not match and continue with Step 2.
    • If the totals match in every column:
      • You need to repeat this step choosing progressively in same time increments in the Columns field eg. Quarter, then Month, then Week, and then Day.
      • Stop when TOTAL ASSETS do not match TOTAL LIABILITIES & EQUITY in at least one column on the report. Note if the totals do not match where the column heading of the earliest instance then continue with Step 2.
Identify the damaged account:
    • Click on the Reports menu > Company & Financial and then choose Profit & Loss Standard.

After that, the From and To field, you have to enter the date that matches to the column heading you checked in step 1.e. For eg., Enter the first and last date of that year if the if the column heading was a year, If it was a month then enter the first and last dates in that month.

    • After that select Select OK.
    • Now Audit the integrity of each account on the report:
      • Note the amount next to the first account displayed on the report.
      • In the account window, Double-click the amount that you want to open the Transaction Details.
      • Note the total from the balance column at the bottom of the report.
      • Continue, If it matches the account total from the Profit & Loss report.
      • If it does then note the account number and continue.
      • After that close the Transaction Detail by Account window.
      • To create a list of one or more corrupted account, you have to Repeat Steps 2.d.i through 2.d.iv for every account on the Profit & Loss report
  • Merge the damaged account(s) with new one(s).

If your Balance sheet is out of balance on both Accrual and Cash bases.

Solution: Identify and repair transactions that do not have accounts assigned. Run the following report:

  • Run the Custom Transaction Detail report (Reports > Custom Reports > Transaction Detail)
  • Set the Dates for All.
  • Now Set the Basis for Cash.
  • Set Total by to Account List.
  • Add the Item column.
  • Select OK.

Now Scroll to the bottom of the report. The transaction targets have not headed any account assigned to them If the last group of transactions has the empty account or heading No account.

  • Open the Edit Item window for the Item.
  • Change the Account and select OK.
  • Reopen the Edit Item window.
  • Change the Account back to the original account and choose OK.
  • For the above report that does not have an account, You have to repeat Steps 1 – 4 for each transaction.

I hope this will help you. If you are not satisfied yet or want more discussion related to this topic, you can call us anytime, anywhere in all over the USA and talk to Our Intuit Certified QuickBooks ProAdvisor at our toll-free QuickBooks Help number +1-855-441-4417.

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