Troubleshooting Financial Statements

Net Income Not Correct

Net Income appears on both the Balance Sheet and Income Statement. Make sure you know which report the user is looking at.

• Net Income is not calculated in the same way on both statements. Net Income on the Income Statement is a subtotal of all accounts on the Income Statement. Net Income on the Balance Sheet is calculated by taking the difference between the total activity of all Revenue and Expense accounts between the fiscal year start date and the period end date (when the range is "B").
• Check to make sure all the Revenue and Expense accounts defined in the Chart of Accounts are on the Income Statement. If there was a revenue and expense account that had activity that was not on the Income Statement, its value would not be included in the Income Statement net income, but would be in the Balance Sheet net income figure.
• Net Income will also be off if there was a balance in a revenue and expense account from prior years. Run the Trial Balance Report for each prior year using the year-end date as the As of Date. If there is a balance found, the year-end procedure for G/L will have to be rerun for the year the balance(s) is in.

Retained Earnings Not Correct

• Find out when the last year-end closing occurred.
• Verify the account the user is speaking about is defined as type "Owner's Equity" in the Chart of Accounts.
• Verify the account used as the Income Summary account in the latest year-end closing is one of these type "Owner's Equity" accounts on the statement.
• Verify the latest year-end closing left all revenue and expense accounts with a zero balance by running the Trial Balance Report using the As of Date as the last date of the most recent year closed. If the balances are not zero, run the Trial Balance Report for the prior year-end dates for all revenue and expense accounts to see at the end of what year are the revenue and expense accounts balances area zero. Perform a year-end closing for all years necessary.
• When a year-end closing procedure is run, the entries that are generated will be put in the General journal with a transaction date of the fiscal year end date. The reference on the entries for revenue and expense accounts will be Income Summary and the one account specified as the "Income Summary" account (usually retained earnings) will have a reference of Year Closing. General ledger reports will include entries with these references. Financial Statements only ignore Income Summary entries. The reason for this is to make it possible to run statements for a year after the year-end closing procedure has been performed and to roll the year's net income into retained earnings.
• If a prior year statement shows the net income amount in both retained earnings and net income, on the Financial Statement Definition Columns form (available only to version 10 customers who had a prior version. New customers beginning with version 10 do not have access to this form), the Amount Type field needs to be set to Start Bal on the sequence report line for the retained earnings account. This way, it prints the start balance for the retained earnings for the year and shows the net income only on the net income line.

Statements are Not Picking Up Correct Amounts

• Find out what kind of statement the user is working with.
• Verify the date ranges they are using and where they are controlling that from. The date entered on the Financial Statement Output form (available only to version 10 customers who had a prior version. New customers beginning with version 10 do not have access to this form) does not override the dates on the financial statement header. If they have entered dates on the header and now want them blank, have them clear the date fields.
• Verify the information on the statements header, type and most importantly the range. Make sure the type will give them the type of statement they are looking for. Since a Balance Sheet contains asset, liabilities, and owner's equity accounts, the range should usually be S or B. Income Statements contain revenue and expense accounts and should be a range of P or Y.
• Check the information on the financial statements against the general ledger reports. Here are some guidelines:
  • If a balance sheet is out of balance, then generate the Trial Balance Report for all accounts to see if the entire ledger is out of balance. If not, then compare the balances on this report with what is on the Balance Sheet. If there are differences, run the Rebalance Ledger Period Totals utility for those accounts. If the ledger is out of balance, run the Rebalance Ledger Period Totals then re-run the Trial Balance Report. If the ledger is still out of balance, contact Application Support for additional assistance.
  • If income statement balances are wrong, then run the General Ledger Report for all Revenue and Expense accounts. Compare the period totals on that report with the totals on the Income Statement. If there are differences, run the Rebalance Ledger Period Totals utility for those accounts.
  • If it seems like accounts are missing on any report, go into sequence report lines then run the Financial Report Account Check activity. This activity checks which accounts in the Chart of Accounts are missing from the statement. Those accounts will then need to be added into the statement.