QuickBooks tool hub is the most widely used accounting software by small to medium-sized businesses. While it has many fine features, the management of closing entries is critical to enable sound financial reporting and ensure that your books are in order at the end of each accounting period. The article discusses how to view closing entries in QuickBooks and gives some tips on the best practices in proper management.
What are Closing Entries?
Closing entries are journal entries that close a period of accountancy in preparation for accounts in a subsequent period. A closing entry is, for instance, transferring the balances from temporary accounts, which would include those under revenue and expenses, to permanent accounts, such as retained earnings. Such a process clears the temporary accounts to zero such that the income and expenses can be correctly reflected in the new period.
Closing Entries Importance
- Accurate Financial Reporting: Closing ensures financial statements report only the activity of a period.
- Compliance: Proper closing is required to fulfill the demands of accounting standards
- Performance Tracking: They help in performance tracking by providing a very clear snapshot of profitability over any period.
Steps for Viewing Closing Entries in QuickBooks
Open the Chart of Accounts
To close entries, you will need access to your Chart of Accounts. All temporary accounts and permanent accounts are found here.
- QuickBooks: Open the QuickBooks app and sign in to your company file.
- Chart of Accounts: Click on Chart of Accounts under Accounting on the left side.
Filter for Temp Accounts
Temporary accounts are revenues and expenses. To see closing entries, therefore you will need to apply the filter to those accounts.
Find Your Temporary Accounts
- Find accounts with Income and Expenses on your Chart of Accounts.
Apply Filter Option
- You may choose to filter or search for the correct accounts
3. Viewing the History of Transactions
After finding your temporary accounts you can view the history of transactions for them.
- Choose an Account: Click any income or expense account you want to see.
- View Account History: A history for that account opens. You see all transactions, including closing entries. This often includes postings that zero the balance at the end of the period.
4. Create a Closing Entry Report
QuickBooks allows you to create reports that summarize your closing entries, too.
- Reports: Select the Reports tab located on the left sidebar.
- Select Type of Report: Accountant & Sales Taxes. Use the pull-down to choose Closing Entries. You may need to customize the report to show certain dates or account types.
- Customize & Run Your Report: Filters can be changed, like by date, to restrict the report to just the closing entries you want to see.
5. Audit Log
You can also view closing entries through your QuickBooks account’s audit log, a list of all transactions.
- Audit Log: Settings (gear) > Audit Log
- Filter the log: You can also filter the log by date if you want to view specific closing entries at the end of an accounting period.
- Review Changes: This log will completely tell you who and what type of changes they did, including closing entries.
Best Practice in Managing Closing Entries
- Schedule Periodical Closings: Plan a periodical closing schedule (monthly, quarterly, annually) such that your accounts always get updated.
- Accounts Reconciliation: Before closing, ensure that all types of transactions have been entered into the accounts and reconcile them.
- Backup Your Data: Always make a backup of your QuickBooks data before making big changes, such as closing entries.
- Consult with an Accountant: If you are unsure about the proper treatment of closing entries, consulting with a professional accountant can help you ensure that you are in compliance and accuracy.
Common Mistakes to Avoid
Do not forget to close Temporary Accounts. Temporarily accounts will not balance if you do not close them.
- Mistakes in posting: Perform the correct closing entries. Recheck the amounts to be debited to retained earnings.
- Unrecorded Adjustments: Keep your closing entries recorded for reference purposes during audits and similar procedures.
Conclusion
Good financial reporting and compliance require that you view and manage your closing entries in QuickBooks. Using the steps that followed in this article, you will be able to easily access your closing entries to understand your financial statements properly. Always ensure best practices and consult experts when needed to keep integrity up in the accounting records. With the right approach to QuickBooks, it will prove to be a very valuable tool in managing business finances.