Quickbooks balance sheets should equal the liabilities and equities combined. Quickbooks automatically performs these calculations to generate balance sheets, allowing users to focus on other aspects associated with running their business. In some instances, however, the balance sheet generated may not equal the total of the liabilities and equities. Balance sheets such as this are said to be “out of balance,” and solving this problem can prove to be a frustrating task for inexperienced users.
Balance Sheet Formula
Balance sheets revolve around a simple mathematical formula: liabilities+equity=assets. As previously stated, Quickbooks automatically performs these calculations based on the numbers in your account. It pulls numbers across all classes to generate balance sheets for your account. With that said, certain classes may experience an “unbalanced” or “out of balance” balance sheet due to one of the following reasons.
Damaged Data File
One of the most common causes of an out-out-balance balanced sheet is a damaged data file. Intuit has done a remarkable job at eliminating bugs and errors in Quickbooks, but some users may still experience data corruption caused by interference when transferring data. This results in a damaged data file that may trigger an out-of-balance balance sheet.
To fix a damaged data file, restart Quickbooks and create a new Qbwin.log file. Next, run the standard Quickbooks data damage tools on your account. If the problem persists, use the automatic data repair tools. These two sets of tools should solve most cases of damaged data files, which in turn resolves the out-of-balance balance sheet.
Unbalanced balanced sheets may also be triggered by erroneous transactions. For instance entering a discount at the customer level but applying it at the job level may trigger an out-of-balance balance sheet. Other transactions that may trigger this scenario include adding a journal entry linked to a credit memo, adding inventory return and discount together on the same invoice, and certain types of unconventional inventory transactions.
A third possible cause that’s known to trigger unbalanced balance sheet is the use of multicurrency. This occurs when the exchange rate is different at the time of generating the report than when the transaction was originally entered. Otherwise small nuances in exchange rate can throw off your liabilities and assets, which in turn leads to an out-of-balance balance sheet. If you’re processing different currencies in your account, check to make sure the exchange rates are correct.