What Should I Do If My Accrual Basis Balance Sheet Is Out Of Balance?

A balance sheet in QuickBooks can be produced on either a cash or accrual basis.  A balance sheet that’s in balance is one where total assets are equal to the sum of total liabilities plus total equity.  Sometimes, if your company file (.qbw) has become damaged, this fundamental accounting relationship can be broken because of data damage to individual transactions.

Intuit has several troubleshooting steps to attempt to resolve problems with a balance sheet that’s out of balance.  These steps depend on which reporting basis balance sheet is out of balance.  In this article, we’ll summarize the steps to address an accrual basis balance sheet that’s out of balance.  See our related article on resolving problems with a cash basis balance sheet.  There are also other ways to use reports to assist rebuilding a damaged company file.

The most likely cause of an out-of-balance accrual basis balance sheet is an income or expense account with an account balance but without transactions that add up to that balance.  To fix this problem, Intuit recommends a multi-step process that involves:

1. calculating the amount by which the balance sheet is out of balance
2. identifying the problem account
3. testing your account identification
4. recording a check for $.01 to that account
5. running the Rebuild Data utility
6. deleting the check for $.01 previously recorded and testing the outcome

Step 1 – Calculate the Amount Your Balance Sheet is Out of Balance

Produce a standard balance sheet (Reports->Company & Financial->Balance Sheet Standard) and calculate the amount your balance sheet is out of balance.  Be sure to click the Modify Report… button and set the Dates to All and the Report Basis to Accrual.

Step 2 – Identify the Problem Account

First, export your chart of accounts.  From the File->Utilities->Export->Lists to IIF Files… menu selection, choose Chart of Accounts in the Export window and click Ok.

This export procedure will produce a delimited IIF file.  Open this file in Microsoft Excel.  Intuit recommends deleting the first 2 lines of this file, but we’ve kept them in the file in the screenshot below so you can see how the file will appear when you first open it in Excel.  Note that Name is in Column B and OBAMOUNT is in Column F.  Find the out-of-balance amount you calculated in the previous step in Column F, OBAMOUNT.  There are 2 ways to do this: a) use Excel’s Find capability or b) sort all rows below the first 3 rows in the original Excel file (below the first 1 row if you choose to delete the first 2) and scroll through the sorted list of numbers to locate the out-of-balance amount you previously calculated.

Write down the account name from Column B that matches the OBAMOUNT you locate.

Step 3 – Test To See If the Account You Identified Is the Problem Account

Return to QuickBooks and open your chart of accounts (Company->Chart of Accounts or the keyboard shortcut Ctrl + a).  Locate the account you identified in the previous step and double click on it to produce a QuickReport.  Be sure to set the Dates setting to All dates.  If there are no transactions in this account, then the identification process in Step 2 was successful.  You’ve located an account with a balance in the chart of accounts but without transactions that add up to that balance.

Step 4 – Record a Check For $.01 To The Problem Account

Record a check to the problem account for $.01 from the Banking->Write Checks menu selection or the keyboard shortcut Ctrl + w.  On the Expenses tab of the Write Checks window, enter the problem account previously identified.

Step 5 – Run the Rebuild Data Utility

From the Files->Utilities->Rebuild Data menu selection, run the Rebuild Data utility.  This utility will attempt to match the transactions in an account with the account’s balance, thereby resolving the out-of-balance problem on the balance sheet.

Step 6 – Delete the Check Previously Recorded and Test the Results

Delete the check you recorded in Step 4.  Open your chart of accounts (Company->Chart of Accounts or the keyboard shortcut Ctrl + a) and locate the problem account.

If the account you identified was a balance sheet account (accounts payable, accounts receivable, bank, credit card, equity, fixed asset, loan, long-term liability, other asset, other current asset, or other current liability), double click on the account to QuickZoom into that account’s register.  Locate the check for $.01 and delete it by clicking the Edit->Delete menu selection or using the keyboard shortcut Ctrl + d.

If the account you identified was an income statement account (income, expense, other income, other expense, or cost of goods sold), double click on the account to produce a QuickReport.  Be sure to change the Dates setting to All.  Locate the check for $.01 and double click on that entry on the QuickReport.  Delete the check by clicking the Edit->Delete menu selection or using the keyboard shortcut Ctrl + d.

Repeat the steps in Step 1 to produce a standard balance sheet and verify that the balance sheet is in balance.  Be sure to confirm your Dates setting is set to All and your Report Basis is set to Accrual.

Sometimes, if you have several problem accounts, repeating this entire series of steps can restore balance to your balance sheet.  For more serious data problems, send us an email.

To follow Intuit’s discussion of these steps, consult this Intuit knowledge base article.

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