Reconciling your accounts is an important step in your business accounting process. Usually, the reconciliation signals that all of the information in your books has been verified with an outside source and the books can be closed for the month. In other words, the reconciliation is usually final.
From time to time it is necessary to undo the reconciliation. This could be a reconciliation that you just completed or a reconciliation from a previously completed month.
If you use QuickBooks Online as your Accounting software, there are two different methods you can perform to undo the reconciliation. This article mainly focuses on the process non-accountants use to undo the reconciliation in QuickBooks Online.
How to undo the synchronization in QuickBooks Online
Note that Intuit is constantly making changes to the QuickBooks Online user interface, so the actual appearance of your screen may vary slightly from the screenshots shown here.
1. Open the reconciliation report for the reconciliation that you want to undo. To do this, click Reports on the left toolbar and then search for Reconciliation Reports.
2. Select the account and statement that you want to undo the reconciliation and click View Report.
3. Print the report or duplicate the tab and move the tab with the reconciliation report to another monitor. This allows you to quickly refer to the report while you work on undoing the reconciliation.
4. Now open the tab for the account that you are not reconciling by moving the mouse pointer over Accounting in the toolbar on the left and then selecting Chart of Accounts. When the chart of accounts appears, click Show Register.
5. Scroll down the Bank Registers screen until you see the transactions that you want to void. These are marked with an R (a C indicates that the transaction has been matched or entered via bank feeds, but has not yet been matched through the matching process).
You can also filter the transactions in the bank register so that only the matched are shown:
6. Click the box with the R until it is clear, then click Save. You will receive a pop-up warning that your changes may unbalance you the next time you try to reconcile. Click Yes if you really want to undo the reconciliation. Repeat this process for each transaction that you want to undo.
7. Now click the Reconcile button in the upper right corner of the Bank Registers screen.
8. You will receive a warning that your account is not ready to be reconciled because your opening balance is different by the amount of the transaction or transactions that you did not reconcile. Click “We can help you fix it” to review the transactions you canceled in step 6. Make sure these match the transactions you were trying to revoke.
9. You can now reconcile the account.
Reconciling your accounts is an essential part of accounting. In accounting, reconciliation is the process of reconciling transactions that you have entered into your accounting software against the information on bank statements from external sources, usually financial institutions. This is a check and balance measure that you can use to verify the accuracy of your accounting records. When done right, it will also help you prevent fraud in your business.
Although bank and credit card accounts are usually the main focus of reconciliation, any balance sheet account (assets, liabilities, and equity) can be reconciled in QuickBooks Online. Before reconciling all balance sheet accounts, keep the purpose of the reconciliation in mind: to compare your accounting records in QuickBooks Online with an outside source, usually some sort of statement, to ensure that your information is accurate and complete.
In other words, there is no need – or no purpose – to reconcile accounts such as fixed assets or intangibles unless there is an external document that you can refer to for reconciliation. Even then, you will likely only reconcile non-bank accounts once a year, like an inventory reconciliation.
However, you should regularly reconcile any short-term or long-term debt (loan) to ensure that QuickBooks correctly records the principal amount due and interest paid. The process of reconciling these accounts is the same as the process of reconciling a bank or credit card account and usually only takes a few moments.
Foundations of Reconciliation
Let’s briefly summarize the voting process in QuickBooks Online:
Gather your bank, credit card, and credit statements. Ideally, you should reconcile your bank and credit card accounts as soon as you receive these statements in order to resolve any discrepancies immediately. However, if your statements come in at around the same time each month, you can run all of your reconciliations at once.
Enter the closing balance and closing date on the statement for the account you are reconciling.
Check off every transaction in QuickBooks Online that is on your bank statement.
If the Vote screen shows a difference of $ 0, your vote is complete.
Review any pending transactions in QuickBooks Online for duplicates, old pending checks that may need to be reissued, or other errors. Correct any inaccurate transactions (but be careful not to delete any transactions that are actually pending.)
At this point, you have made sure that the information on your bank statement matches the information in your accounting records, you know what transactions are outstanding at the close of the bank statement, and you’ve corrected any incorrect information in your QuickBooks Online company file. If you encounter any errors on the bank statement, contact your financial institution immediately so they can investigate.
Reasons to undo the voting in QuickBooks Online
QuickBooks Online makes the comparison very easy. Sometimes this ease of use can lead you to make a mistake that will result in the need to undo the reconciliation. Let’s look at four common reasons you might need to undo the reconciliation in QuickBooks Online.
The bank has not actually approved the transaction. QuickBooks Online will automatically tick transactions on the reconciliation screen that were entered or reconciled through the bank feed function. If your filters aren’t set properly, it could result in you reconciling a transaction that the bank didn’t actually clear during the billing cycle, causing problems for the next several months. Another common mistake happens when there is more than one transaction on the books for the same amount and you review the wrong one during the reconciliation process. Again, this will cause problems in future months when the same transaction appears to be running a second time.
Something was wrong with the transaction. Whether it’s the name of the vendor, the category the transaction was posted in, or the date of the transaction, sometimes after you have matched, you discover that something was wrong with the matched transaction. Although you can change most of this information without affecting the reconciliation itself, you may want to undo the reconciliation so that your reconciliation reports show accurate information. If you need to change the date of the transaction, you definitely need to undo the reconciliation.
An expense was recorded as a transfer. To help business owners enter their transactions quickly, the programming of QuickBooks Online occasionally suggests entering a transaction as a wire transfer and posting it to an account called an “Uncategorized Asset”. Unfortunately, this is never a correct posting, and there is no way to re-categorize a transfer that should have been posted as an expense. You have to reverse the reconciliation, delete the transfer and then correctly record the effort.
Resolving the reconciliation discrepancy account. All QuickBooks products create an account called Reconciliation Discrepancies and allow users to post any difference between a statement amount and what was cleared in QuickBooks to that account. The reconciliation discrepancy account should be used very rarely or not at all. Therefore, any balance on this account should be checked and corrected. To correct a balance in the account for reconciliation discrepancies, you can undo and redo the reconciliation.
This will prevent the reconciliation from having to be reversed
The reconciliation of your accounts is an important accounting function in your company and should be carried out regularly. While it is relatively easy to undo the reconciliation in QuickBooks Online, it should be more of a rare exception than something you do on a regular basis as part of your accounting process.
Give yourself enough time each month so you can thoroughly review your bank and credit card statements and carefully reconcile each account. If QuickBooks Online automatically marks some of your transactions as deleted on the reconciliation screen, disable them so that you can reconcile them from start to finish. Compare each transaction on your bank statement with the transaction in QuickBooks and do not mark them until you are sure you are choosing the correct ones.
Also, try never to force a reconciliation by posting it to the reconciliation discrepancy account. If your reconciliation is only a few cents different, make sure that the deposits and payments shown on the reconciliation screen in QuickBooks Online are only a few cents different from the total deposits and payments on your bank or credit card statement. Only then should you post reconciliation variances to the account.
The exact reconciliation of your accounts will take some time. However, the accuracy of your accounting and the ability to quickly spot errors – or worse, fraud – are well worth the extra effort. If you find that you are spending too much time reconciling or needing to undo the reconciliation frequently, consider hiring an outside accountant or bookkeeper to assist you with this process. Not only can these professionals help you quickly and accurately with the reconciliation, but they can also alert you to any accounting issues or financial trends that you need to be aware of in your company.
A version of this article was first published on Fundera, a subsidiary of NerdWallet.