Learn How to Fix Beginning Balance in QuickBooks Reconciliation

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A beginning balance represents the amount in an account at the start of a financial period. Discrepancies in this figure can impede the reconciliation process, hindering the closure of your account at the end of the period.

Incorrect beginning balances are primarily caused by discrepancies in the beginning balance or previous reconciliation reports. However, changes made by someone or errors in transaction entries can also be contributing factors.

Rectifying these reconciliation issues involves correcting the opening balance or reversing transaction changes. Therefore, thoroughly read this comprehensive guide to learn how to fix beginning balance in QuickBooks reconciliation, both in the Desktop and Online versions.

Accurate bookkeeping requires reconciling transactions without discrepancies, necessitating the correct beginning balance. We recommend connecting with accounting professionals who can easily handle such discrepancies. Dial 800-580-5375 to connect with them now!

What is Beginning Balance in QuickBooks?

The beginning balance is the first entry in the company’s accounts when it begins trading and at the start of each new accounting period.

However, the closing balance in a company is the same as the opening balance in the beginning after reconciliation. The day you create a QuickBooks account and start adding your bank transactions is considered an opening balance.

If the beginning balance is incorrect, it will directly impact the reconciliation process. So, to keep your balance zero when reconciling, it is mandatory to correct the beginning balance in QuickBooks first.

Reasons Why Your Beginning Balance is Incorrect

Modified transactions and adjustments from previous reconciliations can cause beginning balance discrepancies in QuickBooks, among other possible reasons. Let’s familiarize ourselves with them:

• There might be no balance, or an incorrect balance was entered when you set up the account.
• You converted a company file from a different version of QuickBooks.
• Voided, deleted, or modified previously cleared or reconciled transactions.
• A possible data damage

Fixing the Beginning Balance Issues in QuickBooks Desktop

A beginning balance discrepancy can occur due to a zero balance, an incorrect balance in your account, or when you switched your QuickBooks to another version. Let’s move to the below section and learn how to fix beginning balance in QuickBooks reconciliation by running some reports.

Correct zero balance

If your opening balance is incorrect, the beginning balance will be affected automatically and show incorrect when reconciling. Therefore, you must create the opening balance again to correct and reconcile the beginning balance.

Step 1: Create a Journal Entry

• Go to the Company menu at the top and select Make General Journal Entries.
• Now, change the date to the correct statement date of your beginning balance.

• From the Account dropdown, choose the account you’re reconciling.
• Enter your correct opening balance in the Debit column.
• Finally, consider this journal equity as Opening Balance Equity and click Save.

Step 2: Reconcile to correct the Beginning Balance

Now, let’s reconcile your journal entries again to correct the beginning balance in QuickBooks:

• Go to Banking at the top and select Reconcile.
• Choose your account from the Account dropdown.
• Enter the statement’s date and the journal entry’s ending balance.
• Then, click Continue.

• Choose the type of Deposits and Other Credits as Journal Entry.

[Now, the amount shown for Difference should be zero.]

• Finally, click Reconcile Now.

If your beginning balance still shows incorrect, you might have entered the wrong balance; move to the below step to correct it.

Fix incorrect balance

Let’s run some of the reports to find out any wrong or modified transactions responsible for the beginning balance discrepancies in QuickBooks Desktop:

Fix edited, deleted, or cleared transactions

Reconcile Discrepancy report

The report will find and show the most recent transactions that have changed after the recent reconciliation. Learn how to run it by following the below steps:

• In QuickBooks, go to Reports and choose Banking.
• Select Reconciliation Discrepancy from the dropdown.

• Choose your account with discrepancies from the Account dropdown.
• Then, click OK.
• If the report finds a discrepancy, note down the date of the transaction and the Entered/Last Modified. Now, you can see when the changes are made and fix them accordingly.

Audit Trail report

Running the Audit Trail report helps find any incorrect entries or fraud by any specific account. Go through the below steps to run the report:

• Choose Banking from the Report menu.
• Then, click on Previous Reconciliation.
• Select the account you’re reconciling from the Account dropdown.
• Choose the most recent date of your statement and click on Transactions cleared at the time of reconciliation.

• Select (Report shows as a PDF file) and then click Display to see it.
• Note down the date of the statement and the reconciliation.
• Move back to the Reports and choose Accountant & Taxes.
• Set the Account filter to your account to reconcile. Here’s how:
  • Choose Customize Report.
  • Click on Filter and choose Account from the filters.
  • Then, select your account from the Account dropdown menu.
• Choose Display.
• Set the Date filter with the From field blank and the To date to the statement date.
• Also, configure the Entered/Modified filter with the From date set to the previous reconciliation and the To field set to the same date as today’s.

Previous Reconciliation report

Any discrepancy in the previous reconciliation report can also affect the beginning balance. Therefore, check the reports and fix issues for accounts you’ve reconciled in the past.

You can only access the last reconciliation report as a Pro user. To access the copy of other reports, save the copy on the hard drive and then run the report.

• Choose Banking from the Reports menu.
• Then, click on Previous Reconciliation.
• Choose your Account and enter the Statement Ending Date.
• Select Display to see the reports.

Now, compare this report to the past statements from your financial institution.

Correct the discrepancy

Correcting any discrepancy requires you to modify or enter your transactions again. You can choose one of the following ways to reconcile your transactions with the bank.

Undo a previous reconciliation and redo it

• First, create a QuickBooks company file backup.
• Choose Reconcile from the Banking menu.
• Click on Undo Last Reconciliation.
• Select Continue and then click OK in the popup window.
• Once done, close out of the reconciliation and open it again.

Ignore the discrepancy and force reconciliation by offsetting some adjustment

QuickBooks runs a forced reconciliation to complete the reconciliation process. To do so, select Enter Adjustment. It will automatically create a Journal Entry under a specific expense called Reconciliation Discrepancy.

Follow the below steps if you want to move this automatically created Journal Entry:

• Use the Find features:
  • Select Edit at the top of your screen and click on Find.
  • Choose Advanced and then select Memo.
  • In the find option, type Balance Adjustment and then hit Find. It will show the adjustments QuickBooks made.

• Check or view the Previous Reconciliation report:
  •  Go to Reports and choose Banking.
  • Then, click on Previous Reconciliation.
  • It will display any balance adjustments made in the previous reports.

You will see General Journal Transactions in Cleared Transactions.

Reconciliation Limitations when You Switch from Other QB Version

Reconciliation works differently depending on the versions of QuickBooks. If you migrate your QuickBooks Desktop to QuickBooks Online, some of your transactions may get unreconciled, or you may need to perform force reconciliation.

Let’s Fix Issues the First Time You Reconcile an Account in QB Online

As discussed above, any discrepancy in your previous report on the account’s opening balance can affect the beginning balance. Therefore, correcting the opening balance or previous discrepancies should fix the beginning balance in QuickBooks Online.

Step 1: Review the opening balance in QuickBooks

Go through these steps to review your opening balance and correct it:

• Choose Charts of Accounts under Settings.
• Find and select your account in the list.
• Click on View Register.

• Look for the opening balance entry. In the Account column, you will find Opening Balance Equity.
• Note down the date and opening balance.

Step 2: Compare the opening balance with your real-life account

Now, you have the date and opening balance. You must compare them with your bank details to ensure they are correct.

• Visit your bank’s website and sign in.
• Now, find your statement to match the beginning balance.
• Check the account’s balance on the same day as the opening balance in QuickBooks.
• Compare both balances and ensure they are correct.
• If not, choose the opening balance to expand in QuickBooks.
• Make changes to the opening balance in the Deposit column as per the bank.
• Finally, click Save.

Step 3: Review your account Register

When reconciling your account for the first time, your opening balance is the entry that should be reconciled. So, let’s review the account register to check for any discrepancies.

• Go to the Settings menu and choose Charts of Accounts.
• Find your account on the list.
• Click View Register to get more details on the account.
• Now, look for the opening balance entry in the register. It would be named as Opening Balance Equity in the Account column.

• You will find an R in the checkmark column representing the reconciled transaction.
• Review the other transaction. It should be displayed as blank or C in the checkmark column as the cleared transaction.
• If you see an R on other transactions, choose the transaction to expand the view.
• In the checkmark column, select each box until it is blank. Then, click Save.

Finally, Reconcile your account

The above steps will help you find the discrepancy, edit it, and process a smooth reconciliation. If there’s still a beginning balance discrepancy in QuickBooks Online, here’s how to review it:

• Ensure the original opening balance is correct.
• Review and check your bank account; it should be for the correct account and month.
• Match and categorize the transactions you download.
• Review the discrepancy reports and correct your transactions accordingly.

You might need to move with the discrepancy or force the reconciliation when using a migrated version.

Summary 

After following this informative blog, you must have learned how to fix beginning balance in QuickBooks reconciliation. For a smooth reconciliation, an equal opening and closing balance is necessary. If you can’t find any discrepancies or find any report challenging to run, accounting experts are the ones you should connect with. So, don’t wait; dial 800-580-5375 to connect with QB ProAdvisors, who can reconcile your books without any beginning balance discrepancies.

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