Troubleshooting QuickBooks® Accounting Software Cash Basis Reports
Q - On my cash basis trial balance I am getting a balance in accounts receivable. It is made up of transactions condensed by my client. Is making a journal entry sufficient to fix this problem, or is there a better way to correct it? --- Submitted by Dolores
A - In our previous newsletter article, we addressed Cash versus Accrual Reports ( http://www.4luvofbiz.com/quic_news_56.html ) in general. This question takes the issue one step further by dealing with condensed transactions.
The condense feature, as described in our March 2003 article ( http://www.4luvofbiz.com/quic_news_60.html ) is only necessary when the file becomes too large. For cash basis clients this process is not recommended because the cleared, completed, and reconciled transactions become condensed into one journal entry for the month on an accrual basis with the customer and item detail removed. For Cash basis clients who choose to use the Accounts Receivable and Accounts Payable features creating a new file when the file becomes large is preferred. When the condense feature is used instead, the result is what has been discovered here. The only alternative is to create a journal entry; the challenge will be to understand exactly what the *off set* for the entry should be.
The best suggestion will be to compare the Balance Sheet at the end of the previous period (or possibly an older period if comparative reports are needed) so the journal entry can be made to *balance* to the previous report. Keep in mind that if accrual reports are also prepared, the journal entry will need to be voided or deleted to return the Accounts Receivable and Accounts Payable balances back to what they should be for that type of report.
TRICK: If the file needs to be started again, there are many tools to help automate the process including balance transfer tools and transaction copiers. For members of our QuickBooks Knowledge Base ( http://www.quickbooks4cpas.com ) there is a detailed Set Up Case Study to provide step by step instructions.
As a resource for this and other questions, submit a question via *Ask the Expert* or attend our free, monthly discussion forum tele-class at: http://www.4luvofbiz.com.
About the Author
Bonnie J. Nagayama, CPA has been featured by Intuit in their QuickBooks Advisor Spotlight and frequently teaches and consults on using QuickBooks to its maximum advantage. For a FREE weekly newsletter of QuickBooks tips and tricks, plus many free and low cost QuickBooks resources visit http://www.4luvofbiz.com
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