Q: What to do when you're out of balance in Ledger/Payroll 3

Back to Ledger/Payroll FAQ Page

A: If you discover that you are out of balance, check the following:

Check Balance Sheet
Being out of balance in the Balance Sheet means that your total assets do not match your total liabilities and equity.  There are some things you can do.

1. Check the Beginning Balances
   • Ledger/Payroll 2.4 allowed you to put beginning balances in Heading, Income and Expense accounts (where they don't belong), but ignored them when running the Balance Sheet.
   • Ledger/Payroll 3 converted those beginning balances and tried to use them in the Balance Sheet, creating incorrect totals.
   • Use Customize View on the COA Listing screen to add the field COA Beginning Balance. Make sure that NO heading, income or expense accounts have beginning balances.
   • If any of those accounts DO have beginning balances:
     a. temporarily change the account to an asset type on the COA Detail screen,
     b. set the beginning balance to zero,
     c. change the account back to whatever type it was before,
     d. then run the Verify COA.
2. Check for Total levels, Master/subs, and new accounts
   • Run the Verify COA after adding any new accounts, changing any total levels, or making Master/sub relationships.
3. Check for Transactions against Retained Earnings.
   • On the COA Detail Screen, display the Retained Earnings Account.  On the Transaction History tab, look for any entries.  If any Transactions are found, edit them to use a different account such as a Prior Year Fund Balance (Fig1).

Check Income Statement

The ending number of this statement is the total Income minus total Expense. It can't really be “out of balance” on its own, only when you compare it to some other figure (ie. manual totals, other Income Statements, etc.)

Check General Ledger

This report is a listing of all the transactions for a given time period or account. It compares the total debits and total credits to provide a “proof”. If the “proof” is zero, then the report is balanced (debits and credits are equal).
Ledger 3 calculates the debits and credits slightly differently than 2.4 did. In version 2.4, a credit posted to a debit account was treated as a negative debit. In version 3, the same transaction would be treated as a credit. Thus the total credits and debits would be different, but still correct.
For example: Cash is normally a debit account. If you add money to it, it's a debit. If you take money away, it's a credit. If Cash starts with $500, and we write a check for $100, it's represented like this:

If we were to run a General Ledger report in 2.4, the total credits and total debits would be $400 each. In version 3, the total credits and total debits would be $600 each.
The General Ledger report also uses the beginning balance of an account, adds and subtracts the transactions (debits and credits), to arrive at an ending balance. If the “proof” is not zero, then you've either run the report for just one account (and the report doesn't 'see' the other side) or you've changed the beginning balance of an account.

Still out of balance? Try these accounting tests

For a more detailed guideline in checking your program for out of balance, download the Ledger Our of Balance Checklist. You will need Adobe Acrobat to view the document.  If you require PDS to assist you in researching out-of-balance issues, a charge may apply.  Please read the document for more details.

Back to Ledger/Payroll FAQ Page