Reversing a journal entry in the QuickBooks tool hub Desktop is quite easy and can correct an error or update your financial records. The following section elaborates on exactly how to reverse a journal entry, with some added tips and considerations.
What is a Journal Entry?
Up until now, you would have an idea of what a journal entry is. Let us now understand how to reverse the process of a journal entry. However, before that, you must know what a journal entry is all about in QuickBooks. A Delete journal entry is used in QuickBooks whenever there is no standard invoice or sales receipt; thus, it implies that there has to be a recording of the transactions. From these can be adjustments to accounts and corrections of errors and other financial activities which have to be documented directly on the general ledger.
Why Reverse a Journal Entry?
You may need to void a journal entry when the following is encountered:
- Wrong Amounts: The amount brought in reflects is wrong.
- Wrong Account: Funds were debited or credited to the wrong account.
- Transaction Change: The company changes something that would make a transaction come out differently than initially written.
How to Void a Journal Entry
1: Locate the Original Journal Entry
Open QuickBooks Desktop: Open your QuickBooks Desktop application.
Access the Chart of Accounts:
- From the top menu.
- Chart of Accounts Menu
- Journal Entry
- Reports
- Accountant & Taxes
- Journal Â
- To add a date range enter the date you’d like to reverse
- Journal Entry
- Double-click on it when you find to open it
2: Make a Reversing Journal Entry
- New Journal Entry
- Company
- Make General Journal Entries
- Reversing Information
Date: Enter the date you’d like to have the reversing entry applied.
Reference No: QuickBooks will number the reversing entry for you, or you can number it if you want to do so.
Details of Account for Each Line of Adjusting Journal Entry: Use each line of the adjusting journal entry but reverse the debits and credits.
- Assume the adjusting entry debited Account A and credited Account B. Your reversal entry will be a credit to Account A and a debit to Account B.
- Make them equal, but in opposite directions-debit to credit.
Memo: A good practice is to make a memo to indicate why an account is being reversed.
Save the Journal Entry: Now that you are reasonably sure that everything is okay, then save and close or save & new.
- Verify the Reversal
- Check the Accounts:
- Make sure the accounts appear on the Chart of Accounts
Report:
You might prefer to have a trial balance or balance sheet report to confirm that all items included in the reversal are properly recorded.
Additional Things to Consider
Timing of Reversals
Acc Books Accounting Period: Make sure you are reversing at the proper accounting period. If it was reversed in the previous accounting period, reversing it in the current accounting period will mess up your financials.
Documentation: Comment on why you are reversing it. This will come in handy when an auditor questions why you reversed that particular journal entry or when you are auditing the bookkeeping of previous years.
Consult Your Accountant
If you are consulting an accountant, let them know about the reversal. They may be able to assist or concur with changes necessary for you to adopt generally accepted accounting standards.
Alternatives to Reversals
Adjusting Entries: Sometimes it is best to make adjusting entries reflecting information by how things should have happened rather than reversing the actual transaction.
Common Mistakes Done
Reversing the Wrong Entry: You should reverse the right journal entry so that you do not have a sequence of mistakes.
Wrong Amounts: The amounts used in the reversing entry are also supposed to be accurate and not less and more than those in the original entry.
No Reason: Lack of reason for the reversal makes it confusing later on.
Conclusion
Reversing a journal entry in QuickBooks Desktop is among the measures taken toward accuracy in financial record-keeping. Following these steps will ensure that you obtain the required corrections to your errors, and your accounting record will be kept well. Cross-check the entries, document correctly, and talk to the financial team so that they get it right to avail correct financial reporting. Such practices will enable you to handle journal entries professionally and confidently. Reversing a journal entry in QuickBooks Desktop is among the measures taken toward accuracy in financial record-keeping. Following these steps will ensure that you obtain the required corrections to your errors, and your accounting record will be kept well. Cross-check the entries, document correctly, and talk to the financial team so that they get it right to avail correct financial reporting. Such practices will enable you to handle journal entries professionally and confidently. Reversing a journal entry in QuickBooks Desktop is among the measures taken toward accuracy in financial record-keeping.
