Reviewing your QuickBooks company file for problems and making corrections will help you avoid problems in the future plus reduce the time required to prepare business tax returns at year end.

• Run an updated general ledger report and display on screen so it can be checked for errors. Start your review on the last page and work your way to page one. Reviewing income and expense accounts is easier to understand than reviewing balance sheet accounts so begin at the end of the report. You will find most mistakes occurring in the income and expense section. Specifically, look for transactions that are coded to wrong accounts and make corrections. Look for consistency in the way you code transactions. For example, if you are paying a monthly loan, determine that all 12 payments show up in the same account.
   

• Run the accounts receivable aging summary report. Using a 12/31 date, write off transactions that have been paid but still show up as unpaid, remove credit amounts that are erroneous, write off transactions that are bad debts. To see the details of all customer balances, double click on the grand total amount (bottom right total of report). You can read more about what causes errors on this report and how to correct them in the next article.
   

• Run the accounts payable aging summary report. If this report shows vendor bills that have already been paid, or will not be paid determine why they still appear on the report and enter appropriate adjusting transactions as of 12/31. If you see negative amounts on this report that are not valid vendor credits, determine why they exist and enter appropriate adjusting transactions.
   

• From your bank reconciliation window, see what old transactions have not yet cleared the bank. Determine why they have not cleared. You can void the 2008 transactions that you know will never clear if they are not in a closed period. The period is closed when your accountant has already reviewed the financial activity or you have prepared financial reports for banks and board members for that time frame. For transactions in closed periods (including any 2007 transactions) that still appear uncleared by the bank use the following procedures to adjust your books:

  • Checks that have still not cleared the bank - use the 'make deposit' activity window to reverse this amount off your books. Enter today's date, use the same account that was used on the original check/bill, and enter the amount of the check, . In the memo field put the check number and payee and any other information you may have.
     

  • Deposits that have still not cleared - do the research to discover why this is the case, and use the 'write check' activity window to reverse this amount off your books. Enter today's date, the amount of the deposit, enter an income account, and in the memo field describe the deposit and enter any pertinent information.
     

  • On your next bank reconciliation, clear both the original transactions and the reversing transactions created.