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Troubleshooting QuickBooks® Accounting Software Cash Basis Reports
Copyright © 2005, Bonnie J Nagayama, CPA
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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.
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Writer's Resource Box:
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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