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Resolve a Balance Sheet out of balance in Cash basis

A balance sheet, regardless of the report basis, should always have the amount of Total Asset equal to the sum of Total Liabilities and Total Equities. If your Balance Sheet is out of balance in the cash basis, it may be caused by incorrectly entered or linked transactions. Follow the solutions below to fix the problem.

Step 1: Switch the report to accrual basis

Checking whether the balance sheet is out of balance in both accrual and cash basis will help determine how to troubleshoot this issue.

  1. From the Reports menu, select Company & Financial and then Balance Sheet Summary.
  2. Select Customise Report.
  3. On the Display tab, choose Accrual under Report Basis.
  4. Select OK.

If the report is out of balance in both accrual and cash basis, your file may be damaged. Refer to Resolve a Balance Sheet out of balance in accrual basis for troubleshooting steps.

If the report is in balance in accrual but not in cash, it means there are problems with specific transactions. Use the steps below to fix the issue.

Step 2: Find and fix the transactions causing the Balance Sheet to be out of balance

Step 1: Determine the date when the Balance Sheet goes out of balance

  1. From the Reports menu, select Company & Financial and then Balance Sheet Summary.
  2. Select Customise Report.
  3. Go to the Display Tab:
    1. Set the Report Basis back to Cash.
    2. Select the year, month, week, and day the balance sheet goes out of balance.

      Year

      1. From the Dates drop-down, select All.
      2. In Display columns by, select Year.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the year the balance sheet goes out of balance.

      Month

      1. In the From and To fields, enter the year that was found to be out of balance.
      2. In Display columns by, select Month.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the month the balance sheet goes out of balance.

      Week

      1. In the From and To fields, enter the month that was found to be out of balance.
      2. In Display columns by, select Week.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the week the balance sheet goes out of balance.

      Day

      1. In the From and To fields, enter the week that was found to be out of balance.
      2. In Display columns by, select Day.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the day the balance sheet goes out of balance.

Step 2: Find the transaction causing the issue

  1. Once you have the date/s on which the balance sheet goes out of balance, create a Custom Transaction Detail Report that will help you identify the transaction/s causing the issue.
    1. From the Reports menu, choose Custom Transaction Detail Report.
    2. The Modify Report window opens automatically. If it does not, select Customise Report then go to the Display tab.
    3. Under Report Date Range, type the date that your balance sheet went out of balance in the From and To boxes.Example: From = 03/10/00 To = 03/14/00.
    4. Under Report basis, choose Cash.
    5. In the Columns box, uncheck Account, Split, Clr, and Class (if Class is present). This makes the report easier to read. If you are viewing a cash-basis report, select the Paid Amount column to select it.
    6. Select OK.
    7. The ending balance on this report will be the amount that is out of balance. Look down at the Amount (on an Accrual report) or the Paid Amount (on a Cash report) column, for a transaction that equals the ending balance of the report. If there is a single transaction that matches the ending balance, proceed to step 3.
  2. If you are still unable to find transaction/s that make up the out of balance amount, run the following reports to try to find the transactions.

    Customer Report

    1. From the Reports menu, select Custom Reports and then Transaction Detail.
    2. The Modify Report window opens. If it does not, select Customise Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to Cash.
      2. Set the From and To date as the day that the balance sheet goes out of balance.
      3. Set Total by to Customer.
    4. Go to the Filter Tab:
      1. On the Filters list, select Transaction Type.
      2. On the Filter detail information, select Multiple Transactions then choose Invoice, Credit Note, and Payment.
      3. Select OK.

    If the total is the amount by which the balance sheet went out of balance on this date: Find the customer who has a non-zero (positive or negative) sub-total. This customer has damaged transactions.

    If the total is non-zero (positive or negative) and not the amount by which the balance sheet went out of balance on this date: Add other transactions to the Transaction Type filter. Most often you need to add Journal Entries but you may also need to add Checks.

    Supplier Report

    1. From the Reports menu, select Custom Reports and then Transaction Detail.
    2. The Modify Report window opens. If it does not, select Customise Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to Cash.
      2. Set the From and To date as the day that the balance sheet goes out of balance.
      3. Set Total by to Supplier.
    4. Go to the Filter Tab:
      1. On the Filters list, select Transaction Type.
      2. On the Filter detail information, select Multiple Transactions then choose Bill, Bill Credit, and Bill Payment.
      3. Select OK.

    If the total is the amount by which the balance sheet went out of balance on this date: Find the supplier who has a non-zero (positive or negative) sub-total. This supplier has damaged transactions.

    If the total is non- zero (positive or negative) and not the amount by which the balance sheet went out of balance on this date: Add other transactions to the Transaction Type filter. Most often you need to add Journal Entries.

    1. From the Reports menu, choose Accountant and Taxes and then Journal.
    2. Select Customise Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to Cash.
      2. Set the From and To date as the day that the balance sheet goes out of balance.
    4. Select OK.

    Note: The Debit and Credit Totals will not match, which confirms that you have the right date when your Balance Sheet went out of balance. You need to find the specific transaction/s that show the debit total not matching with the credit total, or one of its accounts is blank under the Account column. Pull up that transaction, then delete or recreate as necessary.

    Other transactions

    1. From the Reports menu, select Custom Reports and then select Transaction Detail.
    2. The Modify Report window opens. If it does not, select Customise Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to Cash.
      2. From the Dates drop-down, choose All.
      3. Set Total by to Account List.
      4. Add the Item column.
    4. Select OK.
    5. Scroll to the bottom of the report. If the last group of transactions has the heading No accnt and the Account column is blank, then these transaction targets have no accounts assigned to them. Try the following:
      1. From the Lists menu, select Item List.
      2. In the Item List window, right-click the item and choose Edit Item.
      3. Change the Account and select OK.
      4. Reopen the Edit Item window.
      5. Change the Account back to the original account and select OK.
    6. Repeat step e for each transaction that does not have an account in the report above.
  3. Determine if a certain type of transaction is putting Balance Sheet out of Balance in Cash Basis. Some of the transactions you need to look for are:

    An stock return and discount on an invoice

    Possible Scenario Recommended Fix
    • You sold one or more stock items.
    • Your customer returned one or more stock items.
    • You have a discount item.
    1. Create a new invoice for the sale and the discount.
    2. Create a credit note for the stock return.
    3. Link the credit note to the invoice in Receive Payments.

    A discount entered at the customer level and applied at the job level

    Possible Scenario Recommended Fix
    • You have a customer with several jobs. 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.
    • You record the payment to the invoice and enter the discount on the Discount/Credit Tab.
    • Your cash basis balance sheet will be out of balance.
    Re-enter the payment and split it among the job, then enter the discount at the job level so it matches the invoice.

    A journal entry linked to a credit note

    Possible Scenario Recommended Fix
    You have an open Credit Note and you enter an offsetting General Journal Entry then link it to the Credit Note.
    1. Edit the journal entry.
    2. Move the A/R account to the source line, usually the first line of the GJE.
    3. Save the JGE and make sure it is still linked to the Credit Note.

    A discount that offsets to a balance sheet account

    Possible Scenario Recommended Fix
    You record a discount and you use a balance sheet account to offset the discount. Change the discount account to an income or expense account. If you have been instructed by your accountant to use a balance sheet account and it is important that you use cash basis reporting, you can use this workaround instead:
    1. Offset the discount to an expense account.
    2. Create a journal entry moving the discount from the expense account to the balance sheet account.

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

    Unconventional stock transactions

    Possible Scenario Recommended Fix
    • You have transactions that adversely affect stock such 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.
      • Washing Transactions with (+) and (-) units of the same item at the same price.
      • Transactions that use a damaged item, damaged customer, or damaged supplier.
    • You have a negative stock that affects your Cash Basis Balance Sheet. If this is the case, you may run the basic data damage troubleshooting to bring your Balance Sheet into balance. However, when you enter stock transactions again, your Balance Sheet becomes out of balance again.
    1. Correct transactions causing the Balance Sheet to be out of balance (but this may affect financial statements for previous periods).
    2. Start a new data file.

    If the issue started after upgrading to a new version of QuickBooks, you can:

    1. Reinstall the old version.
    2. Restore the backup created before upgrading.
    3. Prepare the restored data file for an upgrade.
    4. Upgrade your data file again into the new version.

    If the transaction appears to be damaged, or is causing the imbalance without being one of the types of transactions listed above, either delete and recreate the transaction or fix damaged transactions.

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