Having to unreconcile a bank or credit card can lead to an accounting nightmare if done wrong, so let’s have a look at what it means to unreconcile QuickBooks Desktop, some problems that may cause it, how to correct it, and things to watch out for.
QuickBooks Unreconciling Overview
- Reconciling is a great tool to help you match your bank statements.
- Once the bank account or credit card account has been reconciled, you should never go back and make changes to dollar amounts or delete transactions.
- You should learn how to make Journal Entries to reallocate.
- However, what happens if you realize you've reconciled something incorrectly or need to undo a reconciliation?
- QuickBooks Desktop provides a solution for this scenario.
- But, is unreconcile accounts in QuickBooks going to make things WORSE??
Getting a Better Understanding of Reconciliation in QuickBooks Desktop:
To better understand how the unreconciliation process works, let's quickly go over the reconciliation in QuickBooks Desktop so we’ve got a base to start on.
Reconciliation is the process of comparing transactions entered into QuickBooks with your bank or credit card statements to ensure they match.
When you reconcile an account, you're essentially verifying that the transactions in QuickBooks match the transactions on your bank statement for a specific period, typically a month.
Going too long without reconciling accounts is not a good idea. If there are dozens of transactions each day and over 200 transactions a month, it may be best to reconcile on a weekly basis, or you might start screaming at your computer screen.
Why Unreconcile?
There are several reasons why you might need to unreconcile transactions for an account in QuickBooks Desktop.
Entered Wrong Balance
It could be that you reconciled transactions based on an incorrect balance.There should be a warning not to reconcile if the balance doesn't match. Sometimes bookkeepers get sneaky and make a journal entry to make it balance.
Entered Wrong Date on Transactions (Typically the wrong Year)
If you entered transactions in the wrong period (January gets me almost every year, where I enter the year as the last year), you may not need to unreconcile, but you will need to change the year on the dates of the transactions.If there are a ton of transactions, you might need to unreconcile accounts.
Pro Tip: Set a closing date on your data file. Or set a note for yourself at Christmas time to check year dates when entering transactions.
Deleted Transactions
This problem can be a real wild goose chase, especially if it was a transaction from a previous year or accounting period. This problem can affect your financial statements from previous years.
Another tip is that sometimes you don’t need to unreconcile, you just need to make an adjusting journal entry to balance the bank again or re-enter a transaction that got deleted (if you know where the problem is).
Transactions Posted to Wrong Account
If you forget to change the account, you can end up posting a lot of transactions to the wrong account in QuickBooks Desktop. This could be a reason your beginning balance is off and you are considering clicking the unreconcile button.
At some point, you are going to have to become acquainted with the unreconciliation process. Here’s step by step how to do it.
Step-by-Step Guide to Unreconciling Transactions:
Now, let's walk through the process of unreconciling transactions in QuickBooks Desktop:
1. Launch QuickBooks Desktop and open the company file containing the transactions you wish to unreconcile.
2. Navigate to the Banking menu and select Reconcile.
3. In the Reconcile window, select the appropriate account from the Account drop-down menu.
4. Enter the statement date for the reconciliation you want to undo.
5. Click on the Undo Last Reconciliation button located in the lower-right corner of the window.
6. QuickBooks will prompt you to confirm that you want to undo the reconciliation. Click Yes to proceed.
7. Once the reconciliation is undone, QuickBooks will display a message confirming the action.
8. Review the transactions that were previously reconciled to ensure they now appear as unreconciled.
9. You may need to manually reconcile any transactions that were affected by the unreconciliation process.
10. After making any necessary adjustments, close the Reconcile window to save your changes.
That is how you unreconcile accounts in QuickBooks. You've successfully unreconciled transactions in QuickBooks Desktop, allowing you to maintain accurate financial records.
Before you Unreconcile Everything, Consider These:
While unreconciling transactions can rectify errors or adjustments, it's essential to follow best practices to minimize the need for frequent unreconciliation:
1. Double-check transactions before reconciling to ensure
accuracy. Check dates and the account you are posting to
2. Reconcile accounts regularly to catch errors early.
3. Keep detailed records of adjustments made during unreconciliation.
4. Avoid deleting past transactions. Instead, learn how to reallocate with Journal Entries.
5. Consult with a financial advisor or accountant for complex reconciliation scenarios.
Conclusion:
Reconciliation is a fundamental aspect of maintaining accurate financial records in QuickBooks Desktop. While mistakes happen, knowing how to unreconcile transactions empowers you to correct errors and ensure the integrity of your financial data. By following the step-by-step guide outlined in this article and adhering to best practices, you can confidently manage your finances and make informed business decisions.
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