Skailit - QuickBooks Online Refresher Course

10.1 The Importance of Error Detection in QuickBooks Online

Even experienced bookkeepers make mistakes. In QuickBooks Online, small errors can compound quickly and lead to serious issues such as:

• Inaccurate Profit & Loss and Balance Sheet reports
• Overpayment or underpayment of taxes (especially HST/GST to the CRA)
• Cash flow surprises and poor business decisions
• Reconciliation problems that waste hours every month
• Potential CRA audits or penalties
• Loss of credibility with business owners and accountants

Good error detection habits allow you to maintain clean books and catch problems before they become expensive to fix.

10.2 Most Common Errors in QuickBooks Online

1. Duplicate Transactions

One of the most frequent errors — especially when using bank feeds and manually entering invoices or expenses at the same time.

Signs: Revenue or expenses appear twice in reports, bank balance doesn't match books.

2. Wrong Account Classification

Recording an expense as an asset, or a capital purchase as a regular expense.

3. Incorrect HST/GST Handling

Charging HST on exempt sales, forgetting to claim Input Tax Credits, or using the wrong tax rate.

4. Timing Errors

Recording transactions in the wrong month or fiscal year.

5. Reconciliation Issues

Deleting or editing reconciled transactions, missing bank fees, or uncleared items.

6. Undeposited Funds Problems

Customer payments sitting in Undeposited Funds instead of being deposited to the bank account.

7. Personal vs Business Mixing

Owner personal expenses recorded in business accounts.

10.3 Powerful Tools for Detecting Errors in QBO

QuickBooks Online provides several built-in tools to help you find discrepancies:

• Reconcile Tool – Shows uncleared transactions and differences
• Trial Balance Report – Quick check if debits equal credits
• General Ledger Report – Detailed transaction history
• A/R and A/P Aging Reports – Spot overdue or old items
• Bank Feed "For Review" section – Uncategorised or unmatched items
• Profit & Loss and Balance Sheet variance analysis
• Audit Log – Tracks who changed what and when (available in Plus and Advanced)

10.4 Step-by-Step Error Detection Process

1. Start with bank and credit card reconciliations — any difference is a red flag
2. Run the Trial Balance report — debits must equal credits
3. Review the Profit & Loss for unusual spikes or drops compared to prior periods
4. Check the Balance Sheet for strange balances (negative cash, unusually high receivables)
5. Examine A/R Aging for very old invoices
6. Review Undeposited Funds account — it should usually be close to zero
7. Scan the General Ledger for large or suspicious entries
8. Use the Audit Log to see recent changes

10.5 How to Fix Common Errors

Fixing Duplicate Entries

Steps:

1. Run Profit & Loss or General Ledger filtered by date
2. Locate the duplicate transaction
3. If not reconciled: Delete the duplicate
4. If already reconciled: Create a reversing journal entry or use "Exclude" in bank feed

Correcting Wrong Account Classification

Use a Journal Entry to move the amount from the wrong account to the correct one.

Fixing HST Errors

If HST was not charged or claimed correctly, use a Journal Entry to adjust HST Payable and the related expense/revenue account.

10.6 Advanced Error Detection Techniques

• Compare Trial Balance this month vs last month for large unexpected changes
• Run "Transaction List by Date" and sort by amount to spot outliers
• Use Custom Reports to show only transactions over a certain dollar value
• Review the "Account History" for any account that looks suspicious
• Check for negative balances in liability or equity accounts (usually wrong)

10.7 Canadian-Specific Error Detection (HST Focus)

Pay special attention to:

• HST collected on sales vs HST paid on purchases
• Correct provincial HST rates applied
• Input Tax Credits properly claimed on business expenses
• HST Payable balance on the Balance Sheet matches your records

Run the GST/HST Summary report before every filing period.

10.8 Best Practices to Prevent Errors

• Reconcile accounts every month without exception
• Review bank feeds daily or every few days
• Use bank rules for recurring transactions
• Attach source documents to every transaction
• Never delete reconciled transactions — void or reverse instead
• Keep personal and business transactions strictly separate
• Document all corrections with clear memos

10.9 Extended Self-Check Questions

Q1: What is one of the most common causes of revenue being overstated in QBO?

Answer: Recording both an Invoice and a Bank Deposit for the same sale.

Q2: If the bank reconciliation shows a difference, what should you do first?

Answer: Check for missing or duplicate transactions and bank fees not yet entered.

Q3: What should you do if you discover a reconciled transaction was entered incorrectly?

Answer: Do not delete it. Create a reversing journal entry or consult your accountant.

Q4: Why is the Undeposited Funds account important to monitor?

Answer: If it has a large balance, it means customer payments have not been properly deposited to the bank account.