QuickBooks is used to maintain balance sheets by businesses around the world. For any business to function smoothly, it must have a correct record of its assets and liabilities. It can be a massive issue if QuickBooks balance sheet is out of balance. QuickBooks records revenues and expenses as they occur on an accrual and cash basis; therefore, the QuickBooks balance sheet out of balance error can be caused by many circumstances. If you have been facing this issue, this guide will help you in solving it.
What Do You Mean by a QuickBooks Balance Sheet out of Balance?
A balance sheet refers to a statement depicting total assets and total liabilities for any business or person. Both assets and liabilities must be equal in Amount, and any disparity would mean that there is a balance sheet out of balance.
How to find if the balance sheet is out of balance in QuickBooks?
Finding if your balance sheet is in the correct order or not is simple in QuickBooks. You just need to follow these simple steps:-
Open reports.
Click on Company and Financial.
Hit Balance Sheet Summary.
Select Customized Report.
Click on Display Tab.
Set the Report Basis to Cash.
Click OK.
Now, check your statement for both assets and liabilities and if there is any difference between their amount, then your balance sheet is out of balance.
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You also need to check the balance sheet on an accrual basis by changing the report basis type to accrual in the above steps.
Sometimes, you may get a notification popup on the screen with a message saying “your balance sheet is out of balance” as well.
How to Resolve a Balance Sheet out of Balance in Accrual basis or Cash basis Issue?
Cash accounting simply records transactions when paid, but Accrual accounting measures a company's performance and position by recognising economic events regardless of when cash transactions occur. Balance sheet out of balance issues can be caused in either of the balance sheets, and thus analysing both of them is equally important. You can follow these steps to figure out the mistakes as well as rectify them:-
Note:- Make sure to take a Backup of your Company File before you start fixing your balance sheet issues as it may require some modification in the transaction.
Step 1- Run your Report on an Accrual basis.
This is the first step you need to follow where you are required to run reports from Company and Financial option:-
Click on the Report menu and then select Company & Financial.
Now press on Balance Sheet Summary
Choose Customize report
Select Accrual under Report Basis from the Display tab
Press OK
If your accrual balance sheet is out of balance, you need first to rebuild your company file. Continue to Step 2 if it's out of balance simply on a cash basis or if it's still out of balance after a rebuild.
Important: Keep track of whether your balance sheet is out of balance on an accrual basis simply or on both a cash and accrual basis. This will be required in the following steps.
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Step 2: Figure out the date when your balance sheet went out of balance in QuickBooks
You need to figure out the date from which the issue started occurring in your balance sheet, as it will help you figure out the faulty entry more easily. Follow these steps in order to do so:-
Click on the Reports menu and choose Company & Financials and then select Balance Sheet Summary.
Choose Customised Report
Open the Display tab, and from the Date dropdown menu, select All.
Open Report Basis section and select Accrual only if your balance sheet is out of balance in Accrual only, and if not, choose Cash.
Select Year from the Display columns by dropdown in the Columns section.
Choose OK.
Make a comparison between your Total Assets to Total Liabilities & Equity. It will help you understand when your balance sheet went out of balance.
Once you have figured out which Year the difference started, now you need to close down to the date of error-
Follow steps 1 to 6 mentioned above by Choosing Display column by dropdown and then choose Month for the Year where the issue started.
Again follow steps 1 to 6 first by choosing weeks the same way we did months and then again by choosing a day.
These steps will help you figure out the exact day where the issue started occurring.
Step 3: Figure out which Transaction is causing your balance sheet to be out of balance.
Now you have the date on which the QB balance sheet went out of balance. You just need to find out which transaction is causing the issue. Run a Custom Transaction Detail report for the particular date:-
Go to the Report menu and then select Custom Report. After that, click on Transactional Detail.
Look for the Report Date Range section in the Modify Report window. In the From and To fields, type the date the Report became unbalanced.
Now open the Report Basis section and choose Accrual if the mismatch is in just the Accrual balance sheet, and if not, select Cash.
Uncheck Account, Split, Clr and Class in the columns. Select Amount as It will help you read the reports in an easy manner. Choose the Paid Amount column.
Choose OK
The Paid Amount column's ending balance should equal the Amount that is out of balance. Analyse the Report and figure out the transaction or transactions that will total the Amount.
Note: If you are able to find the faulty transaction by following the above steps, then continue to the next step else directly move down to Advance Troubleshooting Steps in this article.
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Step 4- Change the dates of the transactions.
Now that you have found the issue causing transactions, Changing the dates of the faulty Transaction will help you repair them:-
Note down the date of the transaction or transactions which are causing the issue. Change their date to any day 20 years in the future.
Now save each Transaction.
Now refresh the Report, and if you are right about the Transaction causing the issue, the Paid Amount column should be zero.
Change back the dates of transactions that were dated in future to their original dates.
If your issue is still not resolved, You need to delete the transactions and re-enter them if your Balance Sheet remains out of balance in QuickBooks even after changing the dates.
Advanced Troubleshooting steps to Solve QuickBooks Balance sheet out of balance issue (Only If You’re Unable to Find the Faulty Transaction)
Advanced Troubleshooting requires you to look deeply into reports and find out the issue sincerely. It is a tedious task and requires you to follow these steps-
Part 1- Run a Customer Report
There is a possibility that you are facing this issue because of a damaged customer transaction causing a non zero balance. These are the steps to look into it-
Click on Custom reports and then transactional detail from the reports menu.
Modify the report window should open itself, but if it doesn't. You can just choose Customise report and then go onto the Display tab.
You need to do the following on the Display tab:-
Select Accrual as the report basis.
Set the From and To fields to the date on which the Balance Sheet becomes unbalanced.
Set Total by Customer.
Now, look into the Filter tab:-
Select Transaction Type from the Filters list.
Select Multiple Transactions from the Transaction Type dropdown menu, then mark Invoice, Credit Memo, and Payment.
Click OK
In case the figure that came out is equal to the Amount by which your balance sheet is mismatched- Look for the customer who has a subtotal not equal to zero (in plus or minus). Your Customer's transactions are probably damaged.
In case the figure that came out is not equal to be the Amount by which your balance sheet is mismatched- Try adding other transactions, such as Journal Entries and Checks to the Transaction Type filter.
Part 2- Run a Vendor Report
Follow the similar steps that you did in the previous part till setting Total by to Customer.
Click on Filter Tab and then-
Select Transaction Type from the Filters list.
Select Multiple Transactions from the Transaction Type dropdown menu, then mark Bill, Bill Credit, and Bill Payment.
Select OK
In case the figure that came out is equal to be the Amount by which your balance sheet is mismatched- Look for the vendor which has a subtotal not equal to zero (in plus or minus). Your vendor's transactions are probably damaged.
In case the figure that came out is not equal to be the Amount by which your balance sheet is mismatched- Try adding other transactions, such as Journal Entries and Checks to the Transaction Type filter.
Part 3- Run a Journal Report
The debit and credit totals not matching ensures that you had the right date when the balance sheet went out of balance. Follow these steps to do so-
Click on the Report menu and then choose Accountant and taxes
Choose Customise report and then choose Display Tab
Select Accrual as the report basis.
You need to set From and To field to figure out the day when the Balance Sheet becomes unbalanced
Press OK
You are required to figure out a specific transaction that will represent which debit total is not matching with the credit total or if there is any account blank under the Account column. You are required to open the Transaction and then delete or recreate it if necessary.
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Part 4- Run a Report for Other Transaction
This part is associated with looking into reports item by item. This is the deepest way of analysis you can go through to figure out the cause of error in the Balance Sheet. Follow these steps to do so-
Select Custom Reports, then Transaction Detail from the Reports menu.
The Modify Report window appears on its own. If it doesn't, go to the Display tab after selecting Customize Report.
You need to do the following on the Display tab-
Select Accrual as the report basis.
Select all from the Dates dropdown menu
Set Total by to Account List.
Mark Item in the Columns list.
4. Choose OK
5. Scroll down to the bottom, and if in case the last group of transactions has the heading No account with a blank account column, then according to it, there is no account assigned to these transactions. You can fix it by following these steps-
Click on the Lists menu and then choose Item List.
Right-click the item and then click on Edit Item
Change the Account and then press OK
Now Change the Account back to the original Account by repeating steps ii and iii. Press OK.
6. Now, you need to repeat step number 5 for all the transactions that have no account assigned to them.
What are the common reasons causing QuickBooks balance sheet out of balance?
Many times QB balance sheet mismatch error can be a human mistake; by that, we mean it can be caused if someone fails to register an entry or registered wrong values for an entry; let's look into what should be done in such a scenario-
Error caused due to return of an inventory or Discount on an invoice
There was a discount that was entered at the client level but was then applied to the work level.
A credit memo is related to a journal entry.
Inventory transactions that are not conventional
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Examine and repair particular types of data loss.
In case you fail to find out the Transaction causing the disbalance, there is a possibility that data damage might be caused because of something that is outside the scope of standard data damage investigation. You can perform some specific types of data damage troubleshooting using the options indicated below. These are uncommon, and the procedures to accomplish them can be difficult. Before you go through any of them, make sure you have a backup.
Use this method if the Balance Sheet Summary is unbalanced, but the Balance Sheet Detail is balanced, or vice versa. In case both of these reports have a similar basis as well as similar data range, the possible problem is with your Account. In order to resolve this issue, you need to find out the corrupted Account and then merge it with a new account.
Make a comparison between two different reports and find out the two reports that have two different Amounts.
Create a new account and then merge it with the new one.
Note- You should be aware that only similar kinds of accounts can get merged. For example, that means that you would only be able to merge an "Income" type account with another "Income" type account.
A- Click on Lists and then choose Charts of Account.
B- Right-click on the damaged Account and then choose Edit Account
C- Select Save & Close after adding an asterisk (*) to the Account's name.
D- Right-click anywhere on the screen and select New. Create a new account with the same name as the old one. When you're finished, click Save & Close.
E- Right-click on the original Account and then choose Edit Account
F- Now remove asterisk (*) from the name
G- To confirm that you want to merge the two accounts, select Yes.
Follow this method if you are facing Quickbooks accrual balance sheet out of balance error that means your accrual basis balance sheet is equal for all the dates but does not balance out for any other data range.
Firstly backup your Quickbooks company file
Select Chart of Accounts from the Lists menu.
Right-click on the Uncategorised Expense account and then choose QuickReport.
Choose Customise Report from the Dates dropdown and then select All.
Click on the Filters tab and then choose Posting Status from the Filter List.
Select Either and then OK. Look for transactions that have an amount value but no item or Account.
Repair every Transaction
Now repeat step 7 till you have verified every Transaction, then rerun the Balance Sheet report.
If your accrual balance sheet is out of balance, but your cash balance sheet is right, you will have to find out the damaged income or expense Account with no balance but no transactions and merge them into new accounts.
Figure out the difference between assets and liabilities
Select Company & Financial from the Reports menu, then choose Balance Sheet Standard.
Select the Customise Report option. Select All from the Dates dropdown menu, then Accrual as the Report Basis.
Make a note of the distinction between Assets, Liabilities, and Equities.
2. Find out the damaged Account.
Export your Chart of Accounts and run the file in Microsoft Excel
The first two rows of the spreadsheet should be highlighted and then deleted. These are header rows that aren't necessary.
From Column G onwards, highlight and delete them. These columns aren't required for our needs. In Column F, Row 1, you should see OBAMOUNT.
Choose the cell above Row Header 1 and left of Column Header A in order to highlight the entire spreadsheet.
Sort the whole spreadsheet by Column F.
Find the Row with the difference between Assets and Liabilities & Equities in Column
Take a note of the name of the Account.
3. Repair the Damaged Account
Run a QuickReport for All dates on the Account mentioned in the above step in QuickBooks
There is a problem with this Account if there are no transactions.
If there are no transactions, there should be no balance.
Generate one cent ($0.01) cheque to this Account
Now Run the basic data damage troubleshooting on the company data file
QuickZoom on the Account by double-clicking it and then delete the cheque of one cent you created
Run the accrual basis balance sheet in order to make sure it is in balance.
In case your balance sheet is out of balance after condensing the data, and the JE's represent the value without associated accounts (applies to the US only) might be due to changing the associated Account on a payroll item after that was used as a paycheck and then running Condense Utility. You are required to correct the affected journal entries if you want to fix the issue-.
You need to restore the company from the backup generated prior to condensing your data.
Generate a Transactional List by Date Report. Now check out the Reports menu and then choose Accountant & Taxes and then Transactions List by Date.
Use the Transaction Type: Journal and All Dates filters to narrow down the results.
Find any Journal Entries with an amount but not related to any account.
Now open the Make Journal Entries Window by double-clicking on Report.
Optional- You can print these entries for future purposes by clicking on the Print icon near the top of the window.
Select Delete General Journal from the Edit menu.
Choose New General Journal from the Edit menu and then re-enter the journal entry you deleted in the previous steps by entering the correct Account.
Choose Save and New, and follow the similar step from 5 to 8 for the rest of the affected Journal Entries.
If only one column such as Total shows an uneven balance while the rest of the column shows the correct balance, follow this method. In some column versions of a Balance Sheet, total assets match total liabilities and equity, but not others. When you set columns to display Total alone, for example, the report balances, but when you set columns to display by Year, the Report does not. It's possible that one or more of your accounts may be damaged. You will have to figure out the damaged Account and then merge it into a new one in order to resolve your issue. -
Find out which view of the report data is out of balance.
Choose Company & Financial from the Reports menu and then Balance Sheet summary
Choose the Dates dropdown arrow and then select All.
Press on OK to display the balance sheet
Select Total only from the Columns dropdown arrow, and check to see whether Total Assets and Total Liabilities and Equity match.
In a condition where the Total does not match in at least one column, note down the column heading and then find out the latest instance where the totals start mismatching. And continue with Step B.
In case the totals match, move on to step A.5
5. Choose Year from the Columns dropdown arrow, and check that Total Assets and Total Liabilities and Equity match for all columns on the Report.
In a condition where the Total does not match in at least one column, note down the column heading and then the latest instance where the totals start mismatching. And continue with Step B.
In case the total match in every column-
Follow the exact same step after selecting progressively smaller time frames such as Months, then week and then day) in the column field.
Stop when Total Assets in at least one column on the Report do not match Total Liabilities and Equity. Continue with Step B after noting the column header of the first occurrence when the totals do not match.
B. Figure out the Damaged Account
Choose Profit & Loss Standard from the Reports menu, then Company & Financial.
In the From and To fields, enter a date range that matches the column heading you found out in Step A.5 . Eg. In case the column heading states year, type in the first and last dates of that fiscal year, and if it is Month, enter the first and last date of the Month.
Press OK
Now you need to Audit the integrity of each Account on the Report.
Note down the Amount next to the first Account on the Report.
Open the Transactional Detail by Account window by double-clicking the Amount.
Note the Total in the Balance column at the bottom of the Report.
Continue if the account total on the Profit & Loss report matches.
Note the account number and proceed if it does not match the account total on the Profit & Loss report.
Close down Transaction detail by Account window
You need to repeat the steps from B.d.1 to B.d.4 for all the accounts on the Profit & Loss report in order to create a list of one or more damaged accounts.
C. Now merge the damaged accounts with a new one
In case your B/S is mismatched for both Accrual as well as Cash
Identify and repair transactions that do not have accounts associated with them to address this. Run the Report that follows:
You need to open the custom transactional report.
The date should be set for all
Basis should be set to Cash
Account List should be set to Total by
Add the item column
Press OK
Go to the bottom of the Report. If you find that the last group has a heading No account and the account column is blank, it would mean that there are no accounts assigned to these transaction Targets. Follow these steps to fix it-
Run the Edit item window for the item.
Change the Account and press OK
Open the Edit item window again
Now change the Account back to its original Account and press OK
Now follow Steps 1-4 for every transaction that does not have an account on the above Report.
How to keep your balance sheet in balance?
These are few things that can cause a mismatch in your balance sheet, and you should be extra careful when dealing with it-
Discount applied on inventory that was returned:- The sale and Discount should be included on the invoice. For the returned merchandise, a credit memo must be created. When you receive payment, the credit memo should be linked to the invoice.
Credit memo Related to Journal entry:- Linking journal entries to credit notes should be done with caution. If a journal entry causes the discrepancy, amend the entry and make sure A/R is listed as the source on the first line. Verify that the credit journal entry is still linked to the credit memo.
So these have been a few methods that would surely help you fix your QuickBooks balance sheet out of balance issues. This includes simple as well as advanced methods of Troubleshooting. QB is a brilliant application for managing business finances. For any business that finds it challenging to manage their books of Account, QuickBooks is the way to go.
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