This article deals with finding errors in your accounting section
that can affect your balance sheet. Before you start be sure you have
latest version of the program (6.2.55y or above) and run Verify in the
Income & Expense section to be sure all errors it finds are corrected.
Once Verify runs clear (No Errors Found), you are ready to start working
on your balance sheet.
The first step is to insure that your balance sheet is balanced when
you start. To do this run a balance sheet for the first day on which
you have records in your Income & Expense section. This should be at
the point where you have finished setting up your accounts and before
you start entering any income or expenses. If this balance sheet does not
balance the difference is your starting balance. To enter this you need
to make an entry for OWNER EQUITY and enter whatever amount positive or
negative that you are off. You will then get the word BALANCED at the
end of the Balance Sheet report.
If the balance sheet does not balance it will tell you that also and
show you how much you are off.
FINDING DISCREPANCIES
The
method for finding discrepancies is fairly straight forward. For our example
lets assume it is now Dec 31, 2005 and you started your business on Jan 1, 2005.
Regardless of the time period involved in your balance sheet you will follow
this same basic proceedure.
So you run a balance sheet for 12/31/05 and it shows that you are out
of balance. Next run a balance sheet thru 6/30/05 and see what that shows.
It may show the same or a different balance off, or it may show that it
is now balanced. If it shows balanced then the problem entry is after
6/30, if it shows that it is off there is a problem prior to 6/30. Let's
assume that it is still off on 6/30. Split the difference and run a report
for 3/31. Again, if it is off there is a problem prior to 3/31, if it is
balanced, the problem is between 3/31 and 6/30.
Continue narrowing the date
range until you have it down within a 7 day period and then go to FUNCTIONS
and click on BALANCE SHEET ERRORS. You'll be asked for a start date and the
program will then start running balance sheets from that date forward until it
encounters an error. It will
report the first date it finds where the balance sheet does not balance and
tell you how much it is off on that date. Exit the report go
to FIND/DATE and enter the date of the reported error. Now toggle through the
entries and look for the amount you're off, remember this may be
a single entry or could be a combination of entries. Read through the commen
errors below before you start as the problem may be described there and help
you in understanding what to look for.
COMMON ERRORS
In the process of adding the Balance ability to the balance sheet we
found some discrepancies in the way we had been entering data in the
past. These discrepancies have been corrected in the latest update, and
if you have run Verify you will have corrected many of these entries
already. Since Verify is setup to ignore any transactions with ADJUSTMENT
in the Memo Field, some errors your will have to find manually.
DRIVER ADVANCES
When you are running a balance sheet for an earlier date and you have driver
advances that have been give before the date of the report and settled after the
date of the report you will be out of balance by the amount of the advance. The
program sees a Driver Advance differently depending on whether it's been marked
as OUTSTANDING or SETTLED. An Outstanding advance is considered current - a
settled advance is ignored and the as it appears in the P&L on the date of
the payroll. If you are going backwards looking for errors you need to be aware
of this discrepancy in the report so you're not looking for a reported error
that's actually a driver advance. If you have multiple advances for a given
period the amount the Balance Sheet will be off will be the total of those
advances which were settled AFTER the date of the Balance Sheet report
you're running.
RETURNS ON CREDIT CARDS
One of the changes that has been made to the program is the
way you enter returns or credits on a credit card. The old way of entering this
was
This method of entering these adjustments will create an error on your
balance sheet, so we have changed it to use the same method that's used
for entering cash account adjustments -
You can find these transactions so you can correct them by using the
Advanced Search feature. On the Income & Expense page click
FUNCTIONS/ADVANCED SEARCH
Then in the Advanced Search, select AMT and <> and enter 0 in the
SEARCH PHRASE box. Click the arrow in the drop down box for TYPE IS and
select PAYABLE from the list. Then do the same for PAID BY and select
N/A from the list.
Now click on Search to find the records. The program will then load
all of the records that match that search criteria and you can toggle
through them and correct them. If you don't remember what the original
transaction was you can use the FIND function and search for the amount
to find the original charge.
Another problem which was create by the old version concerns payroll. If
you do not use payroll this will not apply to you. For payroll users, if
you did not have your payroll setup to expense the payroll tax at the time
you ran the payroll, the program converted your old payroll data and created
some adjusting entries for this. These adjustments are not being picked up
by the balance sheet, so you will need to delete the adjustment the program
made and correct the origianl Liability transactions which were done by
payroll.
Again
you will use the Advanced Search to find the transactions you need to
correct. It is only necessary to correct the entries for this year (2005),
so this time we will use the DATE as the seach criteria. Also check
the > (greater than) button and enter 1/1/05 in the SEARCH PHRASE
box. You will then select LIABILITY for the TYPE, and then select
PYRL TAX EMPLYR from the CHG TO ACCT IS box.
The program will then return any matching records. The old record will
look like -
You will need to change this record from a LIABILITY to an EXPENSE, and
change the PAID BY from N/A to CHARGE. The PAYROLL TAXES charge account
is used to pay this expense. So your transaction will now look like this -
The final change is to
delete the adjusting entry that the program made to the Pyrl Tax Employer
account. The easiest way to find this transaction is to look in the register for
it. Click on REGISTER, then select the LIST OF ACCOUNTS tab. Toggle down the
list and look for the PYRL TAX EMPLYR account. BE SURE YOU GET THE RIGHT ACCOUNT
- you do not want the PYRL TAX EMPLOYER account, you want PYRL TAX EMPLYR which
is a liability account. Click on that account to open it. The transaction you
are looking for will be a NEGATIVE number, near the end of the listings for the
account. When you find it, put your mouse in the TRANSACTION NUMBER field and
RIGHT CLICK and the program will take you to that transaction. Click the DELETE
button to delete the transation. If you are not sure whether it's the right
transactions or not, run a Balance Sheet and follow the instructions above to
track down the error and get the exact amount you need to correct. When all
other errors have been corrected the amount the balance sheet is off will agree
with the amount of that transaction.
CONCLUSION
Most of the problems that occur in getting your Balance
Sheet to balance will be found in ADJUSTING type entries which you have made
during the year. A good way to eliminate the need to spend hours finding and
correcting bad entries is to run a balance sheet often - that way you'll be able
to spot a possible problem early when there are only a few entries to check. If
you get stuck, upload your database and we will see if we can help you get back
on the right track. This service is free for Priority Service users or for any
customers in their initail support period. There is a nominal fee for customers
who no longer have free support. ACCOUNTING ANALYSIS and CORRECTION of errors is
also available for a fee. Please contact support for details on this service.
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