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victoriah1956
March 11, 2024
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Which accounts specifically have to have year end adjustments in QBDT?

  • March 11, 2024
  • 1 reply
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I understand QBs does certain automatic adjustments at year end. 

1) But what exactly triggers that? (if there is no closing date set)

2) Which specific year end adjustments do I need to make, before QBs does it's adjustments?

3)  What if I haven't made any adjusting entries yet, does QBs still do the automatic adjusting entries?

PLEASE don't cut/paste a reply, pointing me to find an accountant!  I need real answered here.

If some of the top community contributors could jump in here, I would greatly appreciate it.

Thanks so much!

 

Best answer by BigRedConsulting

Hi BigRed,

The screenshot attached is the report when I double click the OE account in my COA, so looks like they are one and the same....

It sounds complicated to undo that merge. Is there any harm in leaving it this way at least until I get my 2023 taxes done?

I was just having trouble finding the 2022 adjusting year end entries.  Now that I've found them, I can reset my closing date to 12/31/2023, and move on.

What is your opinion, please?

 


I don't think there's any harm in leaving this the way it is.

 

If you can get the data out of QuickBooks that you need for compliance reasons, then you should be fine.

1 reply

BigRedConsulting
BigRedConsulting
March 11, 2024

QuickBooks doesn't make any accounting adjustments at year end. Rumors that it does are a misunderstanding.

 

The misunderstanding is likely based on reports, such as - for example - the Balance Sheet. As with other accounting systems, the Balance Sheet includes line items for Retained Earnings and Current Earnings.If you run balance sheets for different dates, you'll see those numbers change. However, they don't change because by adding actual adjustments to the company file. Instead, these line items are automatically calculated at report time based on all of the transactions in the company file, similar to the account balances on the balance sheet.

 

Retaining Earnings = Net earnings for years prior to the current year, based on the report date.

Current Earnings = Net earnings in the current year, based on and up to the report date.

 

 

 

    V
    victoriah1956Author
    March 13, 2024

    BigRed,   my Retained Earnings account is missing?  I came across an answer from you from 2020, I believe...

    "Assuming you are a sole proprietor or a partnership, each year you should use a journal entry to move RE to owner equity.

    debit RE and credit owner equity"

    I believe my RE account is actually my Owner's Equity Acct. I run the reports to show new balances, etc and NO Retained Earnings at all.   

    Should I then just leave the OE balance at year end?

    BigRedConsulting
    BigRedConsulting
    March 13, 2024

    RE: I believe my RE account is actually my Owner's Equity Acct.

     

    To determine if this is the case, try double-clicking the account from the chart of accounts.  If you get a register, it is not the Retained Earnings account. If a report runs, it is. Also the Retained Earnings account will not have a balance displayed on the chart of accounts.

     

    If you have conflated the two accounts, the fix (should you decide you want to undo this) is to created a new Equity account for your Owner's Equity and then edit all of the transactions that use the Retained Earnings account and change the account to the new Owner's Equity account.

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