Using the Books review center

Everything you need, all in one place

Clients rely on their books being accurate to make business decisions. That’s why checking transactions and
reconciling accounts are essential to your period-end workflow. However, closing all your clients’ books can be
time-consuming.

How can QuickBooks Online help?

The Books review center in QuickBooks Online automatically finds errors, incomplete expenses, and duplicate
entries. This makes your typical period-end workflow faster and smarter. You can easily track your progress for
individual clients, or even see it across the whole practice via the Client List.
The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.
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Learning outcomes
In this lesson, we’ll cover:

 Using the Books review center at period end

Topics

 About reviewing books

 Tracking progress in the Client List

About reviewing books

Reviewing the books regularly helps keep the books tidy and up-to-date so that clients can get an accurate view
of their finances and make the right business decisions.
The Books review center helps carry out period-end reviews by pulling all the tasks together into a single place
and listing transactions with potential issues.
To start reviewing the books, select Books review from the left-hand navigation of your client’s company file.
Note that this menu option is only available to Admin users accessing company files via QuickBooks Online
Accountant, and that client users don’t see it.
The Books review center has five main tabs that take you through performing a periodic cleanup, solving issues,
reconciling accounts, reviewing financial statements, and even creating report packages. We’ll cover these tabs
later in the lesson. The center also makes it easy to send client requests and asks for clarifications regarding
certain transactions.

You can review books at any interval—the date range above the tabs allows you to adjust the period and carry
out the books review process when it suits you or your client needs it.
To get more information about what you should review each week, month, quarter, and year, check out The
accountant lifecycle lesson or download a copy of the Accounting lifecycle checklist.

Key tasks for year end

Getting your clients’ books into shape

Year end is always an important and busy time for clients and accounting professionals. Some clients may carry
out daily, monthly, or quarterly reviews themselves, but at year end, they will likely need your support to get
the task done correctly—especially in their first year of business.

How can you and QuickBooks Online help?

You can either carry out year-end reviews for your clients yourself, or guide them through the processes
involved to help them understand which features of QuickBooks Online can support them.
In this lesson, we’ll look at the key activities for clients and accountants at year end, and how QuickBooks
Online can keep everything neat and tidy throughout the year in preparation for this important time.

To help you get the most from this lesson, we recommend that you work through the one on using the Books
review center first.
The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.
Continue training
Learning outcomes
In this lesson, we’ll cover:

 The key tasks involved in preparing a client’s books for year- or period end in QuickBooks Online
Topics

 Using the Books review center at year end

 Other reports and tools to support your year-end workflow
 Year-end review checklist
 Year-end review checklist: additional tasks
 Additional guidance on recording mileage at tax time

Using the Books review center at year end

The Books review center helps you carry out year-end reviews by pulling all the tasks together into a single
place and listing transactions that have potential issues.
In most cases, the five tabs of the Books review center provide the checklists and tools you need to carry out the
listed tasks for that part of the review.
However, some year-end tasks are outside the capabilities of Books review at this time. If a task isn’t included
in the Books review center by default, you can add it to the Additional Items section of the relevant tab—either
as a simple “To do” item, or with a hyperlink to the relevant area in QuickBooks Online.

ProAdvisor tip

Follow this link for a helpful article with more information about year-end activities for business accounting.
There’s also a heads-up about important tax deadlines!
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Other reports and tools to support your year-end

workflow
As well as the Books review center, the other key areas in QuickBooks Online where you’ll find the reports and
tools for year-end activities are the Reports center and Accountant Tools, which is available in QuickBooks
Online Accountant.
Select the tabs to find out more.
 The Reports center
 Accountant Tools
You can access a range of reports, such as the Balance Sheet and Profit and Loss, from the Reports center. You
may also need to run reports to complete specific tasks, such as a Transaction Detail report, the Open Invoices
report, and the Reconciliation Summary report.
To do this, select Reports from the left-hand navigation and scroll down to the For my accountant section.

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 Accountant Tools
You can find a variety of tools in Accountant Tools to support your year-end activities. These tools include:

 Voided/deleted transactions
 Close books
 Reclassify transactions
 Write off invoices
 Prep for taxes

You may need to use these tools to complete your year-end review tasks, as you’ll see next.
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Year-end review checklist
Now let’s explore some key tasks you’ll likely need to carry out at year end.
We’ll start by looking at fundamental tasks that apply to most QuickBooks Online companies. These are as
follows:
Accessible from Books
Year-end task Which tab in Books review?
review?

Setup
Review key year-end reports (Balance Sheet,
Yes
Profit and Loss) Final review

Setup

Transaction review
Ensure transactions are categorized correctly Yes
Account reconciliation

Final review

Setup
Analyze fixed asset purchases and
Partially
depreciation expenses Final review

Evaluate accounts receivable (A/R) and

No N/A
accounts payable (A/P)

Ensure that account reconciliations are up to

Yes Account reconciliation
date

Produce any management reports Yes Wrap-up

Use the headings to explore each task in more detail.

Review key year-end reports (Balance Sheet, Profit and Loss)
You can launch the Profit and Loss and Balance Sheet reports from the Setup tab, as shown below. You’ll also
find them in the Additional Items section of the Final review tab.
For both reports, add a Previous Year (PY) column and look for any unusual balances.
Review these reports in the same way as you would for any period-end review. You’ll also need to use them to
complete some of the other year-end tasks, as you’ll see later.
Ensure transactions are categorized correctly

Some of the work you should do to check that transactions are categorized correctly can be done in Books
review’s Transaction review tab. Here, you can see and fix the following:

 Uncategorized transactions
 Transactions without payees
 Transactions sitting in Undeposited Funds (Payments to Deposit)
 Unapplied payments
To carry out a full review of transactions to run the Transaction Reports, you’ll need to drill into the appropriate
balance on the Profit and Loss and Balance Sheet reports. You’ll also need to run the related Transaction Detail
reports.
You can launch the Profit and Loss and Balance Sheet reports from the Setup tab as shown below. You’ll also
find them in the Additional Items section of the Final review tab.
In addition, when you review reconciliations via the Account reconciliation tab, you may discover uncleared
transactions that are actually duplicates. You need to delete or void these transactions, as you’ll see later.
Analyze fixed asset purchases and depreciation expenses

To analyze fixed asset purchases and depreciation expenses, start by looking at the Balance Sheet and Profit and
Loss statements from the Setup tab, or the Additional Items section of the Final review tab.
Check the following items on the Balance Sheet report:

 Add a column for the previous year, then compare the fixed asset balances year over year to see if there were
additions or subtractions
 Drill down into the Fixed Asset account balances to make sure that all fixed assets have been accounted for
 Compare Accumulated Depreciation account balances against the balances for the prior year. This may be an
indicator that you need to enter depreciation expenses
In the Profit and Loss report, check:

 Whether any fixed asset purchases were mistakenly entered against expense or cost of goods sold accounts
 To see if depreciation has been recorded for the current year. If so, check with the tax preparer to make sure the
amount of depreciation is correct
Evaluate accounts receivable (A/R) and accounts payable (A/P)

Confirm that all invoices for work performed or paid during the year have been recorded. Review the Customer
Balance Detail report to make sure that:

 Payments are applied to invoices

 Uncollectible balances are written off
 The report total matches the accounts receivable balance on the accrual-basis balance sheet

Likewise, confirm that all bills for purchases and services received or paid for during the year have been
recorded. Review the Unpaid Bills report to make sure that:

 Bill payments are applied to bills

 Paid bills have bill payments recorded instead of checks duplicating expense
 The report total matches the accounts payable balance on the accrual-basis balance sheet

What additional reports should you run?

 Accounts payable, including A/P Aging

 Accounts receivable, including A/R Aging
 Open Invoices
 Unpaid Bills
If you find any client-created duplicates (such as an expense entered in addition to or instead of a bill payment,
or a bank deposit entered in addition to or instead of an invoice payment), you should correct these.
Ensure that account reconciliations are up to date

For this task, you’ll need to be in the Account reconciliation tab of the Books review center.
Check that all the client’s accounts are reconciled and verify that amounts from the latest reconciliation match
the balance sheet. You may need to help your clients make sure that their bank and credit card accounts are
reconciled to their statements.
Ensure that the reconciliation wasn’t automatically adjusted and that there are no changes to reconciliations that
affect the ending balance. QuickBooks Online has a number of forensic tools that can help you troubleshoot
accounts that don’t add up. For instance, you can set up a Reconciliation Discrepancies account as well as run a
Reconciliation Discrepancy report. You’ll discover more about running and troubleshooting reconciliations in
the lessons on reconciling accounts in QuickBooks Online and correcting beginning balances for
reconciliations.

What reports should you run?

The Reconciliation reports in QuickBooks Online are great tools to help you determine if all balance sheet
accounts are reconciled. Reports to run are the:

 Reconciliation Summary report, which you’ll find in the Reports center

 Reconciliation Discrepancy report, which you can run from the Reconciliation screen. Note that this report is only
visible/available if someone has made changes to one or more transactions in a previously reconciled period that
affect the account opening balance

You should also run the Balance Sheet and Payroll Tax Liability reports. Other balance sheet accounts (such as
fixed assets) and other receivables like employee loans or liabilities (such as bank loans or unearned income)
need supporting detail reports showing what makes up the ending account balance. Payroll liability accounts
should match payroll taxes calculated for the period and paid in the next period.
Produce any management reports

You’ll find management reports in the Prepare reports section of the Wrap-up tab.
Note that only reports that have already been created will be shown here by default. If you want to create a new
custom report template, you’ll need to do this from the Reports center.
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Year-end review checklist: additional tasks

You may need to carry out additional year-end tasks, depending on the individual setup of a client’s business.
For example, they might be using sales tax, be required to submit W-2 and 1099 tax forms, or need to record
mileage at year end.
Although these tasks may not be included in the Books review center by default, you can add them to the
Additional Items section of any tab, along with a hyperlink to the relevant area in QuickBooks Online. Best
practice is to include these tasks on the Final review tab as—for example—you don’t want to run 1099s until
you’ve checked and (if required) corrected the relevant data.
Select the headings to find out more.
Review any sales tax liabilities and payments

If the client collects sales tax, you should consult the Sales Tax center in QuickBooks Online to view the tax
liability for each tax agency they are registered with.

Run a Taxable sales report to review the balance due based on their schedule. Make sure that any sales tax
filings and remittances are accurate and up-to-date.
You can learn about setting up and using sales tax in the Basic sales tax setup lesson.
Submit W-2s and 1099s

If the client paid any employees or subcontractors in the last year, they’ll need to submit the following forms to
reflect what they paid their workers:

 W-2s for employees

 1099s for contractors

The business owner (the client) should send these forms to the relevant individuals by the end of January.

You can find out more about 1099s in the training on preparing and filing 1099 forms.
Record mileage at year end
IRS guidelines require specific information to substantiate deductible automobile expenses, such as vehicle
type, the date placed in service, and the mileage (total, business, commuting, and other personal mileage).
If your client uses the QuickBooks Mileage Tracker throughout the year, it’s easy to prepare the log for auto
expense deduction. You need to:

 Check the calculated mileage

 Look for vehicle changes (bought or sold)
 View all the recorded trips ensuring none are left unreviewed
 View Manage Vehicles

Another task you could do at year end is to create a journal entry to record the mileage expense, as QuickBooks
Online doesn’t do this automatically. We’ll explore how to do this next.

Additional guidance on recording mileage at tax time

Let’s explore another aspect of what you need to do when recording mileage at year end.
QuickBooks Online keeps track of the mileage and deductible amount, but it doesn’t record the mileage
expense in the general ledger. So when the time comes to file taxes, you could create a journal entry to record
mileage expense on the books and download a CSV file as a backup for your book entries and tax return.
Note: If you’re recording actual auto expenses such as fuel, insurance, and maintenance, you wouldn’t use a
journal entry to record the mileage expense—although you’ll still want to download the log to support business
use.
Select the headings to find out how to do each task.
 Create a journal entry
 Download file with a list of trips
If the client has a mileage expense account, you can create a journal entry to record a mileage expense as
follows:

1. Select + New, then select Journal entry

2. In the Account field, select the Mileage Expense account
3. In the Debits field, enter the mileage deduction amount
4. Add a description such as To record mileage for tax year 2020
5. Choose the client’s name from the Name dropdown
6. Select the appropriate liability or equity account. For example: Due to Owner
7. In the Credits field, enter the mileage deduction amount
8. Save the entry

 Download file with a list of trips

To download a CSV file of your client’s trips:

1. Go to Mileage
2. Choose Download Trips
QuickBooks Online will download a CSV file that you can filter and sort to suit your needs, and save as a
backup document to substantiate the mileage deduction.

Using the Reclassify transactions tool

Getting classifications right

When you’re reviewing a client’s books, you may find transactions that were incorrectly categorized. This
could have happened because the client didn’t understand which account to assign those transactions to.
In some cases, you may find a large number of transactions that need to be reclassified. Correcting these
transactions individually would take a long time.
How can you and QuickBooks Online help?

The Reclassify transactions tool allows you to reclassify large batches of transactions in one go, saving you
considerable time and effort.
You can use the tool to reclassify transactions by account and—if the client has the relevant tracking feature
turned on—class and location.
However, there are situations when you can’t use the Reclassify transactions tool and need to reclassify
manually.
The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.
Continue training
Learning outcomes
In this lesson, we’ll cover:

 Using the Reclassify transactions tool in QuickBooks Online Accountant

Topics

 Using the Reclassify transactions tool

 Limitations of the Reclassify transactions tool

Exploring the Reclassify transactions tool

The Reclassify transactions tool is designed specifically for accounting professionals and is only available to
accountant users who use QuickBooks Online Accountant and clients with QuickBooks Online Advanced.
It provides a variety of search options to allow you to find transactions that need reclassifying.
To open the tool, select Reclassify transactions from Accountant Tools.

Select each highlighted area to find out more about the search and filter options of the Reclassify
transactions tool.

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Let’s see how to use the Reclassify transactions tool to fix a miscategorized transaction.
Watch the video to see how it’s done. The individual steps are below for you to follow.

1. From the client dashboard, select Accountant Tools, then Reclassify transactions
2. In the Account types field, select either Balance sheet or Profit and loss
3. Check the Basis of the transaction, either Accrual or Cash
4. In the From and To fields, set the range of the transactions

If needed, you can set further parameters, such as selecting the account or transaction type, or even
searching for a specific class or location, if they’re in use.
5. Select Find transactions

The left pane shows all of the available accounts, along with any subaccounts for the selected criteria.
Selecting an account would show all the transactions for that account in the right pane.
6. From the left pane, select the account where the miscategorized transaction is
7. Check the box next to the miscategorized item in the right pane
8. Next, select Reclassify
9. In the Change account to dropdown, select the correct account
10. Select Apply

The transaction has been reclassified.

You can also use this function to reclassify in batch and save time.

Limitations of the Reclassify transactions tool

Although you can use the Reclassify transactions tool in most situations, there are some limitations on when
you can use it—and what you can use it for.

Select the questions to discover more about these limitations.

What are the limitations on the data you can change for a transaction?
There are some limitations on what you can change using the Reclassify transactions tool. For example:

 You can’t change the payment account (bank or credit card) for expenses
 You can’t change the account for inventory adjustments, because they’re connected to your inventory shrinkage
and asset accounts
 You can change the expense account for billable expenses, but not the income account for the related income
transactions

In addition, there are restrictions on how you can reclassify certain transactions. For example:

 Transactions that don’t contain a customer name can’t be reclassified to accounts receivable
 Transactions that don’t contain a vendor name can’t be reclassified to accounts payable

What types of transac

The following transactions can’t be reclassified with the Reclassify transactions tool:
Transaction type Why can’t you reclassify it using the tool?

Sales tax transactions Tax payments and tax adjustments are controlled by tax settings

Inventory adjustments Inventory adjustments are item-based transactions

Billable expense transactions in the

The income account is set in Account and Settings
income account

Payroll transactions These are controlled by the Payroll settings

Item-based transactions (invoices,

sales receipts, checks, and/or bills N/A
using the Item details grid)

How do you know which transactions you can reclassify with the tool?
When you use the Modify filter to change accounts, you’ll only see transactions for which the account can be
changed.

Closing the books

Protecting your work

When you or your client finish reviewing a financial period, you’ll want to lock it to prevent changes. Problems
can arise if transactions are added, deleted, or changed after the books are closed.
How can you and QuickBooks Online help?

QuickBooks Online allows you to close your clients’ books at any frequency you prefer. You can set a closing
date or even a password to help prevent changes after you close the books.
Any changes made to the company file after you close the books will be logged. You can run an Exceptions to
Closing Date report to see the changes.
The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.
Continue training
Learning outcomes
In this lesson, we’ll cover:

 Closing the books and running an Exceptions to Closing Date report

Topics

 What’s involved in closing the books?

 Using the Close the books tool
 Setting a closing date and password
 The Exceptions to Closing Date report
 Changing a transaction after the books have been closed

What’s involved in closing the books?

Closing the books isn’t just a year-end process. You or your clients can close their books at any frequency.
Some clients prefer to do it each month after they’ve completed any reconciliations. However, the books should
be closed at least at each year end, after the tax return has been filed, to finalize all account balances and lock
down the books.
What do you need to do before closing the books?
Before you can close the books, you need to:

 Reconcile all bank and credit card accounts

 Substantiate all balance sheet account balances. In other words, look for things other than bank and
credit card accounts (for example, loan balances and asset values) on the balance sheet
 Review the values on each row of the profit and loss report, and ensure they’re correct for the period
being reviewed

These tasks are explained in the lesson on using the Books review center.

How do you close the books?

QuickBooks Online has a built-in tool that lets you and your clients close their books. You can access this tool
in several ways. The most straightforward method is to select Accountant Tools and then Close books. But
you can also close the books from the Books review screen.

Both options take you to the Advanced tab of Account and Settings. From there, you can start the process of
closing the books. We’ll look at how to do this next.
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Let’s look at how you can close the books in QuickBooks Online, starting from the Advanced tab in Account
and Settings.
Watch the video to see how it’s done. The individual steps are below for you to follow.

1. Once you’re in the Advanced tab of Account and Settings, select anywhere in the Accounting section to
enable editing
2. Use the Close the books slider to start the process
3. Set a Closing date. It can be the current date, although typically it’s at a period end
4. To protect the books with a password, select the Allow changes after viewing a warning and entering
password option from the dropdown

This prevents unauthorized users from making changes. Note that users with admin access or access to
the company file via QuickBooks Online Accountant can change the closing date and password.
 5. Enter and confirm the Password
6. Next, select Save
7. Finally, select Done

That’s it. The books are now closed.

Closing the books in QuickBooks Online

Setting a closing date and password
As you saw in the previous video, you should protect your books with a password when you close them to
prevent unauthorized users from making changes.

Who can set a closing date password?

Only the primary admin or a company admin (including an Accountant user) can set, change or remove a
closing date—or change the password.

What should you and your clients consider when setting a closing date?

 It’s best to create or update a closing date when your client is fairly certain that all the day-to-day
transactions for that period have been entered
 The closed period also applies to nonposting transactions, such as estimates and purchase orders
 Reconciliations can be conducted in closed periods without having to enter a password

Can you change a transaction after the closing date?

Users with the correct permissions can edit or delete a transaction after the closing date—and after the books
have been closed. In this situation, QuickBooks Online will do two things:

1. Display a warning asking the user to enter the closing date password
2. Log the change in the Exceptions to Closing Date report
Let’s look at the Exceptions to Closing Date report in more detail.
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The Exceptions to Closing Date report

The Exceptions to Closing Date report lists all the changes made to transactions before and including the
closing date, and any made after the books were closed. The report allows you to track if any changes are made,
regardless of whether the books are password-protected or not.
Where can you find the Exceptions to Closing Date report?
Once you set the closing date, you can access the report through the Reports center in the For my accountant
section. Note: If no closing date is set, the Exceptions to Closing Date report won’t be available.
You’ll only see details in the report when someone edits a transaction dated before your closing date. If the
report shows nothing, no transactions were changed by any users in the company.
What happens if you change the closing date?
Changing the closing date erases the existing Exceptions to Closing Date report and starts it again from scratch.
You’ll only be able to track changes that occur after the new closing date.
This means it’s a good idea to save and export the existing Exceptions to Closing Date report as a PDF before
changing the closing date. You’ll see that the Exceptions to Closing Date report doesn’t initially display details.
However, you can expand some of the groupings to display the detail within them. To expand all these
groupings, select the Show all link in the top right corner of the report before saving the report as a PDF or
printing it.
To save and export the report as a PDF:
1. Select the Printer icon
2. Choose Save as PDF from the Destination dropdown

3. Then select Save from the bottom of the panel

Note: If you remove the closing date altogether, not only will the Exceptions to Closing Date report’s contents
be erased, but the report won’t even be available to run. So it’s not a good idea to remove the closing date.
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Let’s see how you can change a transaction after closing the books and how the Exceptions to Closing Date
report can identify this.
Watch the video to see how it’s done. The individual steps are below for you to follow.

1. Let’s go to the Expenses center and change the amount of a transaction

Because this transaction date is prior to the company’s closing date, a warning pops up.
2. Enter the password set to protect the account, then select Yes
3. Now go to the Reports center
4. In the For my accountant section, select the Exceptions to Closing Date report

The report shows the Audit History window and the details of the edit we just made.