Year End Tasks and Advice from the Queen

Queen’s Year End Article #1:

After a period of time your QuickBooks file will become larger and larger. One way to reduce the file size is to archive or clean up data. Before you begin this process, it is important to know how QuickBooks cleans up data and what transactions are affected.

Below is a detail of how QuickBooks cleans up data and what transactions are affected. The reports on a cash basis will be the most affected and in reality, it is a good idea to run reports on an accrual basis.

How QuickBooks cleans up data

Important: When you clean up your data file, QuickBooks deletes transactions that you no longer need, replacing them with new general journal transactions that summarize, by month, the deleted transactions. You can also choose to have QuickBooks clean up data by removing list items that you no longer need.

An example of what happens during clean up follows:

If an invoice has been paid in full, QuickBooks deletes the details and includes the amount in a summary transaction showing income accounts. Neither the customer name nor the items sold are retained. However, if an invoice is unpaid, QuickBooks leaves the invoice in your file so you can apply future payments to the invoice.

Important: Cleaning up data has a significant effect on your company file. We suggest you print and review this topic before you proceed.

Which transactions are affected?

The ending date, specified for the period of time before which you want to remove transactions, has no effect on transactions dated after the ending date. For example, if your ending date is 12/31/05, all transactions dated 1/1/06 and later remain unchanged in your company file.

Of the transactions dated on or before the ending date, QuickBooks deletes and summarizes only those that have no effect on transactions dated after the ending date.

This table gives examples of the situations that cause QuickBooks to retain transactions dated on or before the ending date:



A transaction has an open balance Unpaid or partially-paid invoices, undeposited customer payments, unpaid bills, unused credit memos.
A transaction is linked to another transaction that has an open balance An undeposited customer payment that you applied to an invoice. Even though the invoice is paid, QuickBooks retains the invoice because it has a link to an open transaction (the undeposited payment).
A transaction is not marked as cleared Unreconciled transactions in a checking or credit card account.
A transaction is marked as “to be printed” Any invoice, credit memo, sales receipt, or check that has a checkmark in its “To be printed” checkbox.

QuickBooks summarizes deleted transactions

QuickBooks creates summary general journal transactions for the transactions it deletes from your file. Except for transactions that affect the value of your inventory, you can spot the summary transactions by looking for GENJRNL in the Type field of your registers.

There is usually one GENJRNL transaction for each month in which QuickBooks deleted transactions. The transaction amount is the total of the transactions that QuickBooks deleted for the month. For a given month, the register may also show other transactions that QuickBooks did not delete. These are transactions that could be affected by transactions you have yet to enter.

The effect on inventory

QuickBooks removes all inventory transactions until it finds one that cannot be removed. Any inventory transactions falling after the date of the unremovable transaction will not be removed. Upon finding a transaction that cannot be removed, QuickBooks creates an inventory adjustment reflecting the average cost of items on that date.

The effect on your reports

Cleaning up your company file will affect reports that include part or all of the period of time you cleaned up. The main effects are:

Account balances You can still create reports that summarize financial activity for the period of time you cleaned up because QuickBooks adds summary transactions to your company file to preserve account balances. For example, if you clean up last year’s data, you can still create profit and loss reports that compare last year’s results to this year’s.
Transaction detail You won’t be able to create reports that show daily detail for the period of time you cleaned up because QuickBooks has deleted the individual transactions that would have provided the detail. In addition, you won’t be able to create reports that show balances for individual customers or vendors over that period of time. (As a precaution, QuickBooks creates an archive file and a backup file in case you need access to the deleted transactions later.)
Cash basis Cash basis reports won’t be accurate for data that includes a cleaned up time period. Detail transactions needed to determine whether transactions are collected or paid are replaced with transactions summarized by month.
Sales tax QuickBooks retains information about each of your taxable items and your tax agencies (vendors) so that you can get accurate reports about your tax liability. This is the case even if some of the transactions occurred within the period of time that you cleaned up data.

The effect on payroll

QuickBooks does not remove payroll transactions dated in the current calendar year.

The effect on estimates and time data

QuickBooks deletes only those estimates that have a job status of Closed. If an estimate has any other job status, QuickBooks retains the estimate.

QuickBooks deletes time data if it is marked as “billed” or “not billable,” or if its job status is Closed. If you base your payroll on time data, you must also have paid your employees for the time. For example, if you billed your customer for the time but you have not yet paid your employee, QuickBooks does not delete the time data.