Review Transactions in QuickBooks Online
- In our continuing series, QuickBooks Online Year End Checklist, I will cover the next step after reconciling accounts in QuickBooks Online – it is reviewing transactions.
Review transactions after reconciling accounts in QuickBooks Online
After you reconcile your bank and credit card accounts in QuickBooks Online, you should perform a very important step – that is to review the activity in the accounts to make sure that transactions are categorized correctly. Why should you review transactions in QuickBooks Online? Although a transactions may have been reconciled and it may be a valid transaction, it may be categorized to the wrong account. For example, you may see that transactions were categorized to “uncategorized income” or “uncategorized expenses”. Transactions may be categorized to “computer expenses” when in fact they may be “internet expenses”. You may have transactions categorized as “legal expenses” when in fact they are “accounting expenses”. Transactions should be categorized to the correct accounts in order to get meaningful reports out of QuickBooks Online.
Review the Profit & Loss Report
First, run a Profit & Loss report for the period (year, month, etc). Review the amounts on the Profit & Loss Report. Do any amounts look unusually high? Do any numbers look unusually low? Are there large negative amounts that shouldn’t be there?
For any amounts that look too high, too low, or wrong – zoom into the transaction details to see if any transactions are entered to the wrong account. Make corrections as needed by changing the account assigned to the transaction. (Caution – be careful not to delete transactions – especially if they have been reconciled).
Review the Balance Sheet Report
Run a Balance Sheet report for the period end. Review the amounts on the Balance Sheet. Do any amounts look unusually high? Do any numbers look unusually low? Are there large negative amounts that shouldn’t be there? You can also view details of transactions by zooming into each amount.
If you’re not sure whether the amounts on the Profit & Loss or Balance Sheet make sense or if you’re not sure how to fix transactions – it may be time to consult a QuickBooks Online expert or your accountant.
Remember, reviewing the details of your accounting is an important part of ensuring that your QuickBooks Online data is staying clean. Clean data will allow you to run reports that are meaningful. Meaningful reports will give you critical insight into your business.