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jmaurer1
August 21, 2023
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Why do I have negative values on my Balance Sheet

  • August 21, 2023
  • 2 replies
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Hi, 

I am new to bookeeping, and all of the resource material I have reviewed in your learning videos and book resources have positive values.  The negative values per the attached Balance Sheet report is on:  Accounts Receivable,  Accumulated Depreciation, Current Liabilities/Retirement Contribution Payable, and Shareholder Distributions for (SEP, Draws, and Tates).     Also, the Balance Sheet is on a Cash Basis and the values are the same for both 2023 and 2022 values, so there is 0% change.  

 

the Current Assets  (saving and checking) are different for 2023 and 2022 so the Total Assets between years is different. The retained earnings is also different between 2023 and 2022.   

 

Why are there negatives on the Balance Sheet and what does this all mean?!

 

Thank you for your help! 

 

 

 

Best answer by Rainflurry

@jmaurer1 

 

1) A cash basis balance sheet, as you posted, should not have any Accounts Receivable (A/R) balance.  My guess is that someone used a journal entry to post a credit to A/R when they should have used a credit memo.  Credit memos are disregarded when a balance sheet is run on cash basis but will properly show on an accrual basis balance sheet. 

 

2) The negative balance in accumulated depreciation is normal.  That is the amount of depreciation that has been taken on the fixed assets listed.  

 

3) The negative balance in Retirement Contribution Payable is odd, it's generally a positive amount and even then, this should not show on a cash basis balance sheet, only accrual.  So, again, I suspect this balance was posted using a journal entry.  The negative balance indicates that it has been overpaid by that amount.  Double-click the amount to see a history of the transactions that have hit that account to see where it goes negative.  If you can post a screenshot of those transactions, I can try to determine what's going on. 

 

4) The negative balance in Shareholder Distributions is normal.  That amount should be negative.  However, to clean up your balance sheet, those should be closed to Retained Earnings at fiscal year-end.  The totals are correct, it just looks messy.

 

The current assets, total assets and retained earnings should change at the end of each period so there's nothing unusual there.  The fact that the cash basis balances do not change for A/R indicates that journal entries were used when they should have used a credit memo.  There is still a small amount of fixed assets ($3,284) waiting to be depreciated.  Most likely, that amount hit the books between 7-31-22 and 7-31-23.  

2 replies

M
MirriamM
August 22, 2023

Welcome to the Community space, jmaurer1.

 

Thanks for providing detailed information about your concern and a screenshot.

 

There are account balances in Balance Sheet report that should always show as negative amounts, such as accumulated depreciation or distributions. This is because these accounts are showing reductions to the accounts they off-set. 

 

To further check the other accounts showing as negative, I recommend contacting your accountant and having them look into how this account was set up. You may use our Find an Accountant tool if you don't have one.

 

If you have any other questions about QuickBooks, let me know by adding a comment below. I'm more than happy to help. Have a good day.

    Rainflurry
    RainflurryAnswer
    August 22, 2023

    @jmaurer1 

     

    1) A cash basis balance sheet, as you posted, should not have any Accounts Receivable (A/R) balance.  My guess is that someone used a journal entry to post a credit to A/R when they should have used a credit memo.  Credit memos are disregarded when a balance sheet is run on cash basis but will properly show on an accrual basis balance sheet. 

     

    2) The negative balance in accumulated depreciation is normal.  That is the amount of depreciation that has been taken on the fixed assets listed.  

     

    3) The negative balance in Retirement Contribution Payable is odd, it's generally a positive amount and even then, this should not show on a cash basis balance sheet, only accrual.  So, again, I suspect this balance was posted using a journal entry.  The negative balance indicates that it has been overpaid by that amount.  Double-click the amount to see a history of the transactions that have hit that account to see where it goes negative.  If you can post a screenshot of those transactions, I can try to determine what's going on. 

     

    4) The negative balance in Shareholder Distributions is normal.  That amount should be negative.  However, to clean up your balance sheet, those should be closed to Retained Earnings at fiscal year-end.  The totals are correct, it just looks messy.

     

    The current assets, total assets and retained earnings should change at the end of each period so there's nothing unusual there.  The fact that the cash basis balances do not change for A/R indicates that journal entries were used when they should have used a credit memo.  There is still a small amount of fixed assets ($3,284) waiting to be depreciated.  Most likely, that amount hit the books between 7-31-22 and 7-31-23.  

      J
      jmaurer1Author
      August 22, 2023

      Hello Rainflurry,

      Thank you so very much for your detailed explanation and support -- it is very much appreciated and definitely a motivator for solving this mystery!  I see I have a couple of tasks and research to do here but I think I will be able to come up to speed quickly and get this report in the correct format.   I am also going to run the report on an accrual basis so I can understand the differences.  

       

      Have a great day,

      Janette

       

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