Resolve a Balance Sheet out of balance

The Balance Sheet (B/S), either cash basis or accrual basis or both, is out of balance. The Total Assets do not equal the sum of Total Liabilities and Total Equities (A = L + E).

Why is this happening

This issue has three common causes:

  • Your data file is damaged.
  • You have entered or linked transactions that are not compatible.
  • You are using multi-currency.

How to fix it

Collapse All or Expand All

Important: Create a backup of your company file before trying any of the Solutions outlined in this article.

Solution 1: Use basic data damage troubleshooting
  1. Rebuild and verify your data file.
    Note: It is critical that you run the rebuild on the computer where the file is located - not across a network connection.
  2. Use qbwin.log to identify and resolve errors.
  3. Run the balance sheet and check balances to ensure it is in balance.
Solution 2: Fix the transactions causing the B/S 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 > Balance Sheet Summary.
  2. Click Customize Report.
  3. Go to the Display Tab:
    1. Set the Report Basis to either Cash or Accrual, whichever is out of balance.
    2. Select the year, month, week and day the balance sheet goes out of balance.
      Year
      1. From the Dates drop-down, click All.
      2. In Display columns by, select Year.
      3. Click 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. Click 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. Click 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. Click 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.
     

    Here's how:

    1. From the Reports menu, choose Custom Transaction Detail Report.
    2. The Modify Report window opens automatically. If it does not, click Customize 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 = 3/14/00 To = 3/14/00.
    4. Under Report basis, choose either Cash or Accrual, whichever is out of balance.
    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, click the Paid Amount column to select it.
    6. Click OK.
    7. The ending balance on this report will be the amount that is out of balance. Look down 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, click Custom Reports > Transaction Detail.
    2. The Modify Report window opens automatically. If it does not, click Customize Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to either Cash or Accrual, whichever one is out of balance.
      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 Memo, and Payment.
      3. Click 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.

    Vendor Report
    1. From the Reports menu, click Custom Reports > Transaction Detail.
    2. The Modify Report window opens automatically. If it does not, click Customize Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to either Cash or Accrual, whichever one is out of balance.
      2. Set the From and To date as the day that the balance sheet goes out of balance.
      3. Set Total by to Vendor.
    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. Click OK.
     

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

    Journal Report
    1. From the Reports menu, choose Accountant and Taxes > Journal.
    2. Click Customize Report.
    3. Go to the Display Tab:
      1. Set the Report Basis to either Cash or Accrual, whichever one is out of balance.
      2. Set the From and To date as the day that the balance sheet goes out of balance.
    4. Click OK.
     

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

    Other transactions
    1. From the Reports menu, click Custom Reports > Transaction Detail.
    2. The Modify Report window opens automatically. If it does not, click Customize 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. Click 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, click Item List.
      2. In the Item List window, right click the item and choose Edit Item.
      3. Change the Account and click OK.
      4. Reopen the Edit Item window.
      5. Change the Account back to the original account and click OK.
    6. Repeat Steps 1 - 4 for each transaction on the above report that does not have an account.
     
  3. Determine if a certain type of transactions is putting Balance Sheet out of Balance in Cash Basis. Some of the transactions you need to look for are:
    An inventory return and discount on an invoice

    Possible Scenario

    • You sold one or more inventory items.
    • Your customer return of one or more inventory items.
    • You have a discount item.
     

    Recommended Fix

    1. Create a new invoice for the sale and the discount.
    2. Create a credit memo for the inventory return.
    3. Link the credit memo to the invoice in Receive Payments.
     
    A discount entered at the customer level and applied at the job level

    Possible Scenario

    • 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.
     

    Recommended Fix

    You need to re-enter the payment and split it among the job then enter discount at the job the level so it matches the invoice.

     
    A journal entry linked to a credit memo

    Possible Scenario

    You have an open Credit Memo and you enter an offsetting General Journal Entry then link it to the Credit Memo.

     

    Recommended Fix

    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 Memo.
     
    A discount that offsets to a balance sheet account

    Possible Scenario

    You record a discount and you use a balance sheet account to offset the discount.

     

    Recommended Fix

    Change the discount account to an income or expense account.

     
    Unconventional inventory transactions

    Possible Scenario

    • You have transactions that adversely affect inventory 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 on the same price.
      • Transactions the use a damaged item, damaged customer, or damaged vendor.
       
    • You have negative inventory that affects your Cash Basis Balance Sheet. If this is the case, you may run the basic data damage troubleshooting to bring your B/S into balance. However, when you enter inventory transactions again, your B/S becomes out of balance again.
     

    Recommended Fix

    1. Correct transactions causing the B/S 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 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 click here for other recommended troubleshooting steps.

Solution 3: Check and resolve specific forms of data damage

If there are no transactions causing the balance sheet to be out of balance, you may have some data damage that the usual data damage troubleshooting does not fix. The options listed below provide some specific forms of data damage you can check for. These are rare and the steps to resolve them may be complex. Make sure you have created a backup copy of the file before going through any of them.

B/S Summary is out of balance, B/S Detail is in balance or vice versa.

Solution: Identify the damaged account and merge it into a new one

  1. If both reports have the same basis and the same same date range, then you may have account list damage.
  2. Determine the problem account(s) by comparing the two reports and finding the account(s) for which the balance differs on the two reports.
  3. Merge the damaged account into a new account.
Your accrual B/S is in balance for Dates = All Dates, but out of balance for any other date range.

Solution: Find and repair damaged transactions.

  1. Back up your company data file.
  2. In the QuickBooks menu bar, Select Lists and then select Chart of Accounts.
  3. Right-click on the Uncategorized Expense account and select QuickReport.
  4. Click Modify Report.
  5. Click the Report Date Range drop-down arrow and select All.
  6. Click the Filters tab.
  7. In the Choose Filter box, scroll down and select Posting Status.
  8. Select Either.
  9. Click OK.
  10. Search for transactions with an amount but with no item or account.
  11. Repair each such transaction that you find.
  12. Repeat Step 11 until you have verified each transaction.
  13. Rerun the Balance sheet report.
Your accrual B/S is out of balance but your cash B/S is in balance.

Solution: Identify damaged income or expense accounts that have a balance but has no transactions and merge them into new accounts.

  1. Determine the difference between assets and liabilities

    1. In the QuickBooks menu bar, select Reports and select Company & Financial.
    2. Select Balance Sheet Standard.
    3. Click Modify Report and select All Dates for the date range and Accrual for the basis.
    4. Write down the difference between Assets and Liabilities & Equities.
  2. Locate the damaged account

    1. Export your Chart of Accounts to your desktop.
    2. Open the COA file in Microsoft Excel.
    3. Highlight the first two rows of the spread sheet and delete them (These are header rows that you do not need).
    4. Highlight Column G and higher and delete them (These columns are not needed for our purposes).
    5. In Column F, Row 1 is OBAMOUNT.
    6. Click on the cell above Row Header 1 and left of Column Header A to highlight the entire spreadsheet.
    7. Sort the entire spreadsheet by Column F.
    8. Find the row whose Column f amount is the amount from Step 3c1-4.
    9. Be sure to write down the name of this account.
  3. Fix the damaged account

    1. In QuickBooks, run a QuickReport for All Dates on the account noted in Step 3B-8. above.
    2. If there are no transactions then this is the problem account.
    3. There should be no balance if there are no transactions.
    4. Create a check for one cent ($0.01) to this account.
    5. Run the basic data damage troubleshooting on the company data file.
    6. QuickZoom (double-click) on the account and delete the check for one cent.
    7. Run the accrual basis balance sheet to be sure it is in balance.
After Condensing your data, your balance sheet is out of balance and the JE's show amounts without associated accounts.

For example, this issue occurs if you change the associated account on a payroll item after it was used on a paycheck, and then run Condense.

Solution: Correct the affected journal entries.

  1. Restore your company data file from the backup you made before you condensed your data.
  2. Create a Transactions List by Date report: choose Reports > Accountant & Taxes > Transactions List by Date.
  3. Filter the report for Transaction Type: Journal and All Dates.
  4. Scroll down and find any Journal Entries showing an amount without an associated account.
  5. Double-click the report entry to open the Make General Journal Entries window. (Optional) To print the entry for reference before you delete it, click the Print icon near the top of the window.
  6. From the Edit menu, choose Delete General Journal.
  7. From the Edit menu choose New General Journal, and then re-record the journal entry you deleted in the previous step, entering the correct account.
  8. Click Save & New, and then repeat Steps 5 through 9 for the other affected Journal Entries.
One column setting (e.g. Total Only) shows out of balance, other column settings (e.g., by Year) show in balance.

When viewing a balance sheet, total assets match total liabilities and equity in some column views, but not in others. For example, the report balances when you set columns to display Total only, but the report does not balance when you set columns to display by Year. One or more of your accounts may be damaged.

Solution: Identify the damaged account and merge it into a new one

  1. Determine which view of the report data is out of balance:
    1. Click the Reports menu, select Company & Financial, then click Balance Sheet Summary.
    2. Click the Dates drop-down arrow and select All.
    3. Click OK to display the balance sheet.
    4. Click the Columns drop-down arrow, select Total only, and note whether TOTAL ASSETS match TOTAL LIABILITIES & EQUITY.
      • If the totals do not match in at least one column, note the column heading of the earliest instance where the totals do not match and continue with Step 2.
      • If the totals match, continue with Step 1.E.
    5. Click the Columns drop-down arrow, select Year, and note whether TOTAL ASSETS match TOTAL LIABILITIES & EQUITY for all columns on the report.
      • If the totals do not match in at least one column, note the column heading of the earliest instance where the totals do not match and continue with Step 2.
         
      • If the totals match in every column:
        1. Repeat this step selecting progressively smaller time increments in the Columns field (Quarter, then Month, then Week, and then Day).
        2. Stop when TOTAL ASSETS do not match TOTAL LIABILITIES & EQUITY in at least one column on the report. Note the column heading of the earliest instance where the totals do not match and continue with Step 2.
           
  2. Identify the damaged account:
    1. Click the Reports menu, select Company & Financial, then click Profit & Loss Standard.
    2. Enter a date range in the From and To fields that matches the column heading you noted in Step 1.e. For example, if the column heading was a year, enter the first and last dates of that fiscal year. If the column heading was a month, enter the first and last dates in that month.
    3. Click OK.
    4. Audit the integrity of each account on the report:
      1. Note the amount next to the first account displayed on the report.
      2. Double-click the amount to open the Transaction Detail by Account window.
      3. Scroll to the bottom of the report and note the total in the Balance column.
        • If it matches the account total on the Profit & Loss report, continue.
        • If it does not match the account total on the Profit & Loss report, note the account number and continue.
         
      4. Close the Transaction Detail by Account window.
      5. Repeat Steps 2.d.i through 2.d.iv for every account on the Profit & Loss report to create a list of one or more damaged accounts.
         
  3. Merge the damaged account(s) with new one(s).
Your B/S is out of balance on both Accrual and Cash bases.

Solution: Identify and repair transactions that do not have accounts assigned.

Run the following report:

  1. Custom Transaction Detail report.
  2. Set the Dates to All.
  3. Set the Basis to Cash.
  4. Set Total by to Account List.
  5. Add the Item column.
  6. Click OK.

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. Open the Edit Item window for the Item.
  2. Change the Account and click OK.
  3. Reopen the Edit Item window.
  4. Change the Account back to the original account and click OK.
  5. Repeat Steps 1 - 4 for each transaction on the above report that does not have an account.