18 Nov Subsidiary Reports Don’t Agree with the Balance Sheet
It is important to remember that the subsidiary reports are strictly that: reports. They will be accurate based on how they have been set up using the report choice, custom button, and filter button. Below is a checklist to assist in discovering why the results are not what you expect:
Although it seems quite obvious, the problem of any report, at one time or another has been due to a failure to check the report date or date range at the top of the report.
Unpaid Bills or Open Invoices do not agree with the balance sheet or balance detail reports
The most common reason for this is that the “current (faster)” option has been chosen. This is the report default. To confirm that this is the setting, click on the customize button at the top of the report. What this option does is takes the current report, for example, August 24, 2000, and when the date is changed to July 31, 2000, it simply modifies the current report to only include those transactions that were also outstanding at July 31, 2000. Usually, the report that is expected is everything that was outstanding at that point. To obtain a report that will agree with the Balance Sheet Report, select “As of Report Date” or choose the A/R Aging report instead.
Inventory Valuation Summary Report does not agree with the Balance Sheet
This issue is usually the result of one of two situations:
- 1. An entry that has been made to inventory directly, rather than through a transaction by the individual items. For example, a journal entry was created without the ability to enter the transaction information by item, or a bill was entered with inventory as the account on the item tab as opposed to the individual items on the item tab, etc. To correct, simply find the transaction, delete it, and re-enter it through the appropriate form or inventory adjustment method.
- 2. An inventory item has been marked as inactive when a value is still present. If the item is on hand, do not make the item inactive. If the item needs to be inactive because it is no longer present in the business (theft, discarded, etc) or is not able to be sold (damaged, obsolete, etc) an inventory adjustment should be done to remove the quantity and value from inventory and reclassify the amount to the appropriate Profit & Loss account.
Payroll Liabilities by Item does not match the Balance Sheet
More often than not, this occurs because proper procedures were not followed. The liabilities need to be paid through the Employees > Pay Payroll Liabilities option so that the individual items know they have been paid. This is important from a reporting standpoint, but even more important for creating accurate returns. A check coded directly to the liability account does not serve the same purpose.
Sales Tax Liability Report does not agree to the Balance Sheet
The Sales Tax Payable account on the Balance Sheet is based on the accrual method of accounting. This means that the sales tax is recorded as being due and payable as of the invoice date. Most sales tax payments are required to follow this convention. If a difference is evident, and the business is required to remit sales tax based on the invoice date, double check the sales tax preference and confirm that it is marked for as of invoice date. If the business is permitted to remit sales tax based on when the customer actually pays the invoice, the report and the Balance Sheet will never agree by virtue of one being cash basis (reported as payments are received) and the other being accrual basis (general ledger is updated as invoiced).