Resolve the Balance Sheet Out Of Balance In Accrual Basis

If your balance is out of balance, this blog has some information which i have implemented myself. This error means the Amount of total assets is not equal to the sum of total liabilities, and total equities (A=L+E), your balance sheet in accrual basis is out of balance. We are going to discuss the solution of the QuickBooks Balance Sheet out of balance in accrual basis.

Reasons Why Balance Sheet Out of Balance Problem Occurs?

  • Might be your data file is damaged.
  • Transactions which you have entered are not compatible.
  • You are using multiple currencies.

Points to be remembered

Test the Balance Sheet Report

  • Backup of your QuickBooks company file must be created.
  • If the report is back in your balance after then you need to change the report to total by Year.
  • For more information check Balance sheet Report out of balance- Recurring.
  • If the report is back that you have to log out and login back into your balance sheet report.
  • Make sure to repair the server computer, if you are using QuickBooks multi-user environment.

How to solve the Balance Sheet out of balance in Accrual Basis?

Below we have discussed about the quick steps to resolve the balance sheet out of balance in accrual basis.

Solution 1: Troubleshoot basic data damage

Solution 2: Fix the transactions manually

Step 1: Verify the date when the Balance Sheet runs
  • Click on Reports menu and then select the Company & Financial.
  • Click on Balance Sheet Summary.
  • Go to the upper left side of the Summary Balance Sheet window and select the Customize report.
    • Switch Report Basis to Cash.
    • Sleek down the Report Date Range and the columns to determine when the Balance Sheet goes out of balance.
Year
  • Select All, from the Dates drop-down.
  • Click on Year from the Display columns by drop-down.
  • Click on OK.
  • Differentiate the Total Assets and Total Liabilities so that you can find the year in which the Balance Sheet goes out of balance.
  • Redirect to Month.
Month
  • In the To Fields and From entering the year the report has gone out of balance.
  • Click on Month, from the Display columns by drop-down.
  • Select OK.
  • Check the Total Assets and Total Liabilities to find in which month the Balance Sheet goes out of balance.
  • Now, proceed to Week.
Week
  • Click on From and To fields, enter the month the report goes out of balance.
  • Select Day, in Display columns by drop-down.
  • Click on OK.
  • Verify the Total Assets and Total Liabilities to find the week the Balance Sheet goes out of balance.
Day
  • Enter the day the report goes out of balance, in the From and To Fields.
  • Select Day, in the Display columns by drop-down.
  • Click on OK.
  • Verify the Total Assets and Total Liabilities to find the day the balance sheet goes out of balance.
Step 2: Find the transactions causing the issue
  1. You have to enter the date/s when the Balance Sheet goes out of balance, to help you identify the transaction/s causing the problem to create a Custom Transaction Detail Report.
    • Click on Reports menu and then select the Custom Report.
    • Click on Transaction Detail.
    • The Modify Report window should open and if not then select Customize Report and then go to the Display tab.
    • From Report Date Range, enter the date when your Balance Sheet went out of balance in the From and to fields. Example: From= 3/14/00 To 3/14/00.
    • Make Report Basis to Accrual.
    • Uncheck Account, Split, Clr and Class then check Amount. It will make the report more comfortable to read.
    • Select OK.
    • The ending balance on this report will be the amount that is out of balance.
    • Verify the Amount column for a transaction that equals the balance of end of the report. In case there is a single transaction which matches the ending balance then implement step 3.
  2. If you are not able to find the transaction/s which is responsible, then run the following reports.
Customer Report
  1. Click on Reports menu and then select Customer Reports.
  2. Click on Transactions Details.
    • Customize the Display tab:
    • Change the Report Basis to Accrual.
    • Customize the From and To Fields to the day the Balance Sheet has gone out of balance.
    • Change Total by Customer.
  3. Click on Filter tab and then:
    • Onto the Filters list, click on Transaction Type.
    • Select Multiple Transactions from the Transaction Type drop-down and then mark Invoice, Credit Memo and Payment.
    • Click on OK.

✔ If the total is the amount by which the Balance Sheet went out of balance of this date: Identify the customer who has a non-zero (negative or positive) subtotal.

✔ If the total is non-zero (negative or positive) and the Balance Sheet went out of balance on this date by both the amount. Add other transactions to the Transaction Type filter such as Journal Entries and Checks.

Vendor Report
  1. Click on Reports menu and then click on select Customer Reports and then click on Transaction Detail.
  2. Modify Report window will open automatically. If it does not open, then you can select Customize Report, to do that click on the Display tab.
  3. On the Display tab:
    • Change the Report Basis to Accrual.
    • Alter the From and To Fields to the day the Balance Sheet goes out of balance.
    • Change Total to Customer.
  4. Click on Filter tab:
    • Select Transaction Type, on the Filters list.
    • Select Multiple Transactions and then mark Bill and Bill Credit and Bill Payment.
    • Click on OK.

✔ If the total is the amount by which the Balance Sheet went out of the balance on this date: Verify the vendor who has a non-zero (negative or positive) sub-total. This Vendor is the reason for damaged transactions.

✔ If the total is non-zero (negative or positive) and not the amount by which the balance sheet went out of the balance on this data: Add other transactions to the Transaction Type filter such as Journal Entries.

Journal Report
  1. Click on Reports menu and then select Accountant and Taxes.
  2. Click on the Journal button.
  3. Select the Customize Report and then go to the Display tab.
    • Change the Report Basis to Accrual.
    • Change the From and To fields to the day the Balance Sheet goes out of the balance.
  4. Click on OK.

Important Note: The Credit and Debit Totals will not match, which indicates that you have the right date when the Balance Sheet is out of balance.

Other transactions
  1. Click on Reports menu and then select Custom Report.
  2. Click on Transaction Detail.
  3. A Modify Report window will open automatically, and if does not then you have to click on Customize Report and then redirect to Display tab.
  4. From the Display tab:
    • Select the Report Basis to Accrual.
    • Choose All, from the Dates drop-down.
    • Change Total by to Account List.
    • Mark Item, from the Columns list.
  5. Click on OK.
  6. Go to the bottom of the report, if the last group of transactions has the heading No account and the Account column is blank, and then these transaction targets have no accounts assigned to them. Fix this by:
    • Click Item List from the Lists Menu.
    • Click on Edit Item by right click on the item.
    • Change the Account.
    • Select OK.
  7. You can repeat all the steps for every transaction on the above given report that does not have an account.
  8. Determine whether a particular type of transaction is putting the Balance Sheet out of balance.

Choose if a Few types of the transaction is putting Balance Sheet out of Balance in the Cash Basis. Below we have represented few of these transactions you need to see:

Journal Entry linked to a credit memo

Possible Scenario

Recommended Fix

  • Open Credit Memo and enter an offsetting General Journal Entry (GJE) and then link it to the Credit Memo.
  • Edit Journal Entry.
  • Move the A/R account to the source line, generally the first line of the GJE.
  • Save the GJE and ensure it still linked to Credit Memo.
A Discount Applied at Job Level When Entered At Customer Level
Possible ScenarioRecommended Fix
  • Your cash basis balance sheet will be out of balance.
  • You have a customer with several jobs.
  • You receive a payment for the invoice, but your customer includes a discount for Job in the payment.
  • Enter or record the payment to the invoice when you Enter the discount on the credit tab.
  • You completed all of the jobs and invoice of the customer, including all jobs on the invoice.
  • You have to re-enter the payment and crack open it among the job.
  • Now enter discount at the job the level so it matches the invoice.
Discount that offsets to a Balance Sheet account.

Possible Scenario

 Recommended Fix

  • You have recorded a discount and used a Balance Sheet account to offset the discount.
Change the discount account to an income or expense account. If you are instructed by your accountant to use a Balance Sheet account, and it is essential that you have to use Accrual basis reporting, instead apply this:

 

  • Offset the discount to an expense account.
  • Make a journal entry moving the discount from the accounting expense to the account of the balance sheet.

This will pop the discount to the Balance Sheet account while keeping your Balance Sheet in balance.

Inventory unconventional transactions

Possible Scenario

Recommended Fix

  • Transaction Reports that adversely affect your inventory such as:
    • Transactions which make your Quantity on Hand negative.
    • Transactions records that revert the Quantity on Hand for last entered assemblies and cause the assemblies to be labelled pending.
    • Washing Transactions with (-) and (+) units of the same item on the same price.
    • Transactions which use a damaged item and damaged customer or vendor are damaged.
  • You have a negative inventory that affects your Cash Basis Balance Sheet. You have tried implementing basic data damage troubleshooting your company file when your Balance Sheet becomes out of balance one more time.
  • Right transactions causing the Balance Sheet to be out of balance. Make sure that this may affect financial statements for previous periods.
  • Start a new data file.

If the problem starts after the up gradation to a new version of QuickBooks, you can:

  • Install the old version, one more time.
  • Before upgrading, restore a backup.
  • For an upgrade, prepare the restored data.
  • Into the new version, upgrade your data file.

The transaction appears to corrupt or causing the misbalance without being one of the types of transactions listed above and either delete or recreate the transaction.

Inventory return and discount on an invoice.

Possible Scenario

Recommended Fix

  • One or more inventory items are sold.
  • The customer returns one or more inventory items.
  • Discount item is there.
  • For the Sale and the discount, you have to create a new invoice.
  • For the inventory return, create a credit memo.
  • In the Receive Payments, link the credit memo.

Solution 3: Check and resolve specific forms of data damage

If there are not transactions leading the Balance Sheet to be out of balance, you will have some data damage that usual data damage resolution cannot fix. The options mentioned below provide some specific forms of data damage troubleshooting you can do. Ensure that you have created a backup before going through any of them.

Summary of Balance Sheet is out of balance while the Balance Sheet Details are in balance or vice versa.

Solution Method: If both reports have the same basis and the same data range then you may have a corrupted account.

To solve this follow the steps mentioned below:

  1. Differentiate the two reports. Identify the account/s having two different amounts on the two reports.
  2. Combine the corrupted account into a new account.

NOTE: You can only combine accounts which are the same type.

  • First of all you need to go to the Lists menu.
  • Now Select Chart of Accounts.
  • Right-click on the damaged account.
  • Click on Edit Account.
  • Add an asterisk (*) to the name of the account.
  • Click on Save & Close.
  • Perform right-click operation and then choose New.
  • Recreate the original account with its original name.
  • Click on Save & Close.
  • Right-click on the original account, then select Edit Account.
  • Remove the asterisk (*) from the name.
  • Finally Click on Yes to confirm that you are agree to combine the 2 accounts.
Accrual Basis Balance Sheet is in balance for Dates= All Dates, but out of balance for any other range of data.

Solution: Find and repair damaged transaction.

  • Firstly, You need to create a backup of QuickBooks company file.
  • Now Go to the Lists
  • Then, Select the Chart of Accounts.
  • Perform the right-click operation on the Uncategorized Expense account.
  • Click on QuickReport.
  • Now customize report.
  • After that click on the report date range and then select all.
  • Tap on filters menu and select the posting status.
  • Select All, from the Dates drop-down.
  • On to the Filters tab and then select Posting Status from the Filters list.
  • Click on Either and then select OK.
  • Repair each transaction.
Your accrual Balance Sheet is out of balance, but your cash Balance Sheet is in Balance.

Solution: To repair this, you have to identify damaged income or expense accounts that have a balance but have nil transactions and then combine them into the new accounts.

Learn the difference between assets and liabilities.
  • Click on the Reports menu and then select Company & Financial.
  • Click on Balance Sheet Standard.
  • Tap on the Customize button.
  • Select All from the Dates drop-down.
  • Change Report basis to Accrual.
  • Note down the difference between Liabilities & Equities and Assets.
Search the corrupted or damaged account.
  • Export your chart of accounts and then open the file in MS Excel.
  • Highlight the first two rows of the spreadsheet and then delete them.
  • Highlight Column G-onwards and then delete them. These columns not needed for our purposes.
  • You have to see OBAMOUNT in Column F and Row 1.
  • Choose the cell above Row Header 1 and left of the Column Header A to highlight the whole spreadsheet.
  • Sort the whole spreadsheet by Column F.
  • Search the row whose Column F amount is the difference between the Liabilities & Equities and Assets.
  • Make sure to write down the name of the account.
Fix the damaged account
  • In QuickBooks, run a QuickReport for All Dates on the account listed in Step 3B-8 above in QuickBooks.
  • If there are no transactions, then the reason is in Account.
  • There should be no balance if there are no transactions in the Account.
  • Make a check for one cent ($0.01) to this account.
  • Run the basic data damage troubleshooting on the company data file.
  • QuickZoom (double-click) on the account and delete the check for one cent.
  • Finally Run the accrual basis balance sheet to be sure it is in balance.
If your Balance Sheet is out of balance and the JE’s displays the amounts without associated accounts. 

After Condensing your data, your balance sheet is out of balance, and the JE’s show amounts without associated accounts.

Solution: Firstly, correct the affected journal entries:

  • This problem will occur if you change the associated account on a payroll item after it was used on a paycheck and then run the Condensed utility.
  • Restore your company data file from the backup you made before you condensed your data.
  • Click on Reports menu and then select Accountant & Taxes.
  • Click on Transactions List by Date.
  • Verify the report for Transaction Type: Journal and All Dates.
  • Slide down and identify any Journal Entries showing an amount without an associated account.
  • Double-click the report entry to open the Make General Journal Entries window.
  • Click on Edit menu and then select Delete General Journal.
  • Again, go to Edit menu and then click on New General Journal.
  • Select Save and New.
If One column setting (e.g. Total Only) shows out of balance, other column settings (e.g., by Year) show in balance.

When viewing a Balance Sheet, total assets match total liabilities and equity in some column views, but not in others. One or more of your accounts may be damaged.

Solution: To fix this, identify the damaged account and merge it into a new one.

Know which view of the report data is out of balance:
  1. Click on Reports menu and then select Company & Financial and then click on Balance Sheet Summary.
  2. After that click on Dates drop-down arrow and select All.
  3. Now tap on OK.
  4. Onto the Columns drop-down arrow, select Total only and then note whether Total Assets match Total Liabilities and Equity.
    • When total does not match in at least one column, then note the column.
  5. From the Columns, drop-down arrow, note whether Total Assets match Total Liabilities and Equity for all the columns onto the report.
    • If the total does not match in at least one column, list the column heading of the earliest instance where the totals not match.
Verify the damaged account:
  • Click on Reports menu and then select Company & Financial.
  • Choose Profit & Loss Standard.
  • Enter a date range in the From and To fields that match the column heading you noted in Step 1. Select OK.
  • On the report, Audit the integrity of each account:
    • Note the amount next to the first account displayed on the report.
    • Double-click the amount to open the Transaction Detail by Account
    • Scroll to the bottom of the report and note the total in the Balance 
  • Close the Transaction Detail by Account
Combine the corrupted account(s) with the new one(s).

Your Balance Sheet is out of balance on both Accrual and Cash bases.

Solution: To fix this, verify and solve transactions which do not have accounts assigned.

  1. Run the Custom Transaction Detail report
  2. Change the Dates to All.
  3. Now Change the Basis to Cash.
  4. Change Total by to Account List.
  5. Add Item column.
  6. Finally Click on OK.

Now Scroll down of the report. If the last group of transactions has the heading No account and the Account column is vacant, then in that case transaction Targets have no accounts assigned to them. Try the method below:

  • Open the Edit Item window for the Item.
  • Set the Account and click on OK.
  • Restart the Edit Item window.
  • Change the Account back to the original account and then click on OK.

For the above report that does not have an account, You have to repeat Steps 1 – 4 for each transaction.

We hope that this blog has helped you a lot in resolving a balance sheet out of balance in accrual basis and if not then feel free to seek advice from our Intuit Certified QucikBooks ProAdvisors by calling on their 24×7 QuickBooks toll-free helpline Number .i.e. +1(800)880-6389.

 
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