How to Fix Prior Account Balances in QuickBooks

With QuickBooks Accountant and QuickBooks Enterprise Solutions in hand, every company can bank on accurate financial records. However, some differences can always arise between a client’s books and those of an accountant. It is essential to troubleshoot prior account balances in QuickBooks. Such issues arise due to delays when any data is entered, some mistakes, or incomplete transactions.

Comparing balances, flagging differences, and proposing adjustments will simplify reconciliation. This blog presents the simple essential steps that need to be followed by an accountant for the successful use of this tool, making the process of account reconciliation and review of accounts much smoother.

What Are Prior Account Balances?

An important thing to check before commencing troubleshooting is whether prior account balances have discrepancies. Prior account balances mean the balances with which a new review period begins, which are the ending amounts of completed review periods. If these balances are erroneous, then all records will not be correct, reports will be misleading, and many compliance problems may occur.

As you fix the prior opening balance in QuickBooks, it is important to consider reviewing the balances and the discrepancies accompanying them. Prior account balances are the last amounts of completed review periods from which a new review period begins. If mistaken, such balances will translate into inaccuracies in all financial records, report misleading conclusions, and may be associated with issues regarding compliance.

Why Do Discrepancies in Prior Account Balances Occur?

Discrepancies in prior account balances of an accountant’s records and a client’s books can arise due to various factors. Understanding these causes helps in identifying and resolving mismatches efficiently.

Data Entry Errors: Mistakes in entering amounts can lead to incorrect balances.

Late Transactions: Entries made after the review period can cause mismatches.

Missing or Deleted Transactions: Unrecorded or removed transactions affect account accuracy.

Reconciliation Issues: Adjustments that were not properly documented may lead to discrepancies.

Incorrect Review Period Dates: Using the wrong date range can result in missing or extra transactions.

Client Edits Post-Review: Clients may make changes after accountants have finalized records.

Unrecorded Adjustments: Some transactions or corrections might not be reflected in the balances.

Fix Prior Opening Balance in QuickBooks: Enter Prior Review Period Balances

The initial process in fixing the prior opening balance in QuickBooks is to check the prior balances entered. Make sure it has the correct date range. Also, check whether the balances need to be entered manually or copied from records belonging to the client.

Step 1: Correct Date Range

You need to check the date range.

• The review period ends the day before the review period starts.
• The prior period does not have to be equal to the current review period.
• The end date should be accurate to ensure proper retrieval of data.

Step 2: Manual Balance Posting or Copying from Client Records

Follow these steps for new users, old clients, and subsequent reviews.

• New Users: Prior balances should be manually entered.
• Subsequent Reviews: Balance saved automatically by QuickBooks for subsequent review with no need to enter it manually.
• Copying from the client: The accountant has the option to copy balances belonging to the client. A very thorough revision has to take place to rectify the mismatches.

Step 3: Check for Accurate Entry of Data

Follow these steps to check the accuracy of data entry.

• Accounts are listed from the chart of accounts.
• And must then be entered in the correct debit or credit column.
• If copying balances, all figures must be double-checked for accuracy.

Fix Prior Account Balances in QuickBooks: Identify and Analyze Differences

After prior balances have been entered, the next step consists of investigating and analyzing any discrepancies. The QuickBooks accountant copy is aided by QuickBooks in identifying the exact causes of balance mismatches.

Step 1: Displaying Accounts with Discrepancies

QuickBooks shows discrepancies automatically.

• To display only those affected accounts, please enable the option Only show accounts with different balances.
• To quickly navigate between discrepancies, the Alt + N shortcut can be used.

Step 2: Quick Zoom and Transaction Change Reports

Quick Zoom is a quick way in QuickBooks that allows you to delve deeper into your financial information with a click. Like all transactions and different columns, it allows you to see details. Now follow these steps:

• Click Account under the Difference column, and the Transactions by Account Report pops open.
  
  
• It would show all transactions after the review period. 
• This helps accountants to understand whether or not the movements in balance are due to new transactions.

Step 3: Filtering and Managing Transactions

This ensures that only changes that are immediately relevant are available to accountants so that they can quickly zone in on the mistake.

• Confirm the dates with the client to conclude data entry. 
• Transaction change reports should be dated for one day only after completing data entry.

Fix Prior Opening Balance in QuickBooks: Correct Balance Discrepancies

An analysis must be done to factor in any differences. The accountant has to perform any adjustments or corrections required to ascertain the correct balances and their integrity.

Step 1: Make Adjustments to Accord Correct Balances

All discrepancies require an adjustment that ought to result in the correct set of records.

Step 2: Post Adjusting Entries

After making the adjustments, post the entries.

• Select the View Suggested Adjustment option to view the proposed adjustments.
• QuickBooks will determine the suggested adjusting journal entries based on the variation of columns.
• The adjusting entries must be reviewed and amended before acceptance by accountants.

Step 3: Maintain the A/R and A/P Adjustments for Compliance

Make sure to maintain the adjustments for compliance.

• Adjustments done to Accounts Receivable (A/R) must always have the name of the corresponding customer assigned.
• Amounts payable to the A/P cannot include accounts from A/R that are adjusted in one entry.
• When adjustments involve records older than 90 days, a prompt warning will appear in QuickBooks before proceeding.

Fix Prior Opening Balance in QuickBooks: Finalize and Verify Balances

Once adjustments have been made, accountants will carry out their investigations to ensure that the discrepancies have all been resolved.

Step 1: Checking the Difference Columns

If the adjustments worked, the Difference columns should display zero balances.

Step 2: Reversing Adjusting Entries If Required

Change the entries wherever required.

• Any adjusting entry necessary to reflect the balances of the current period may have to be reversed.
• QuickBooks has a feature through which adjustments may also be reversed by itself if needed.

Step 3: Checking That All Accounts Are Balanced

Make sure all the accounts are balanced by using these steps.

• Where several adjusting entries have been passed, each account affected should show the correct balance.
• In the case of A/R and A/P balances, ensure that adjustments in one ledger are passed in separate entries.

Best Practices to Fix Balances from Client’s File

Avoiding discrepancies in the future will likely result from accountants’ best practices to fix balances from client’s files.

Step 1: Periodic Review of Previous Balance

Keep checking the balance with time.

• Check balances frequently to eliminate errors before they pile up.
• Compare balances for the beginning and end of every review period.

Step 2: Advising Clients on Data Entry Completion Dates

Ask the client to close transactions before the end of the review period. Set deadlines in stone so no changes will come at the last moment.

Step 3: Keep Records Updated for Future Reviews

Keep client data reviewed in QuickBooks by these steps.

• Always save reviewed balances in QuickBooks for any future reference.
• Have an audit trail in place for changes and corrections.
• Keep a detailed log of all adjustments for full transparency.

Conclusion

You need to troubleshoot prior account balances in QuickBooks to maintain clean financial records and keep them on the right side of compliance. By systematically reviewing balances, bringing errors to light, and facilitating corrections, accountants would be able to reconcile their work without going through the painful process in the future.

In addition to these measures, there are also avenues that accountants can take to reduce repeat incidences of balancing issues. Clients should be well educated and aware of deadlines for information entry; there should be an established trail document signifying all audit transactions.

FAQs

What is the Client Data Review tool in QuickBooks?

The Client Data Review (CDR) tool embedded in QuickBooks enables accountants to diagnose and fix errors in their clients’ financial records efficiently. It contains options for troubleshooting prior account balances, reclassifying previous transactions in QuickBooks, and adjusting opening balances. The audit trail allows the user to reconcile accounts with balances, see any discrepant items, and effect the corrections required to arrive at an accurate and consistent set of financial records.

How do I view the differences between my records and the client’s records?

The troubleshoot prior account balances tool compares the client’s books with the accountant’s records to identify discrepancies. The Difference columns automatically highlight mismatches, while the “Only show accounts with different balances” option allows extraneous data to be filtered out. The Quick Zoom option then enables users to open detailed transaction reports to efficiently identify and resolve discrepancies.

How can I see the transactions causing the differences?

To pinpoint transactions responsible for discrepancies, QuickBooks employs the use of the Transaction Change Report and the Quick Zoom tools. The Transaction Change Report will list all transactions that have been entered after the period of review, which will allow accountants to determine whether balances were affected by late entries or modifications of entries. The range of reporting dates can be adjusted so that only the relevant changes are displayed, therefore yielding an easier analysis of the source of mismatches.

Can the tool create adjusting entries for me?

Yes, the Troubleshoot Previous Age Tool can also create adjusting journal entries to correct imbalances from prior accountants. By selecting View Suggested Adjustment, accountants can view and apply suggested adjustments based on the different columns. However, they should also verify all the adjustments’ validity before applying them for compliance-audit purposes, especially for accounts Receivables (A/R) and Payables (A/P). Thus, any reporting discrepancies would also be avoided by correct financial reporting.

How do I handle discrepancies in Accounts Receivable and Accounts Payable?

QuickBooks does not allow for the adjustment of Accounts Receivable and Accounts Payable with the same journal entry, so discrepancies should be resolved separately. Since there is a need to track A/R adjustments, the customer name should always flow with the A/R adjustment. If there are discrepancies in both accounts, the adjusting entries should be done separately with more than one adjusting entry. After adjusting, it would be a good idea to go back and check the Difference columns showing A/R to ensure that prior balances are reconciled.