Reversing a transaction

If your accountant wants you to maintain a strict record of all your accounting entries, you should reverse a transaction rather than change or delete it.

A reversal transaction is a new transaction that replicates the original transaction, but with debit amounts shown as credit amounts and vice versa. After posting a reversal transaction, you have two transactions (the original and the reversal), but the account balances appear as if the original transaction was never posted.

A reversal transaction is automatically posted to the same account for the same amount as the original transaction. You cannot change the amount or account of a reversal transaction.

Before you can reverse a transaction

You can only reverse a transaction if it is unchangeable. An unchangeable transaction is identified by a gray zoom arrow (

) next to it. To make your transactions unchangeable, select the Transactions CAN'T be Changed; They Must be Reversed option on the Security view of the Preferences window. You can change this preference at any time.

Reversing transactions can affect closed periods

When you reverse a transaction, be aware of the date you enter:

▪

If you use the current date when you reverse a transaction from a prior month, the month-end financials for the prior month will not reflect the reversal transaction.

▪

If you use the original date for the reversal transaction, your prior month’s financials should be reprinted because they will have changed.

Customer and vendor payments

If an early payment discount was applied to a sale or purchase, you also need to reverse the discount. For more information on how to find a transaction, see ‘Finding a transaction’.

Negative inventory

You cannot reverse a purchase that will result in a negative on-hand inventory count.

To reverse a transaction

Display the transaction you want to reverse. See ‘Finding a transaction’ for instructions.

Go to the Edit menu and choose Reverse [...]. For example, if you want to reverse a sale, choose Reverse Sale. A new transaction containing corresponding negative amounts to that of the original transaction will appear.

If you want, alter the date and memo. Note that you can’t change the accounts and amounts.

tip : Recap transaction

Before you record this transaction, you can use the recap transaction feature to view the journal entries that will be created when the transaction is recorded. To recap, choose Recap Transaction from the Edit menu.

Click Record Reversal to record the reversal transaction. The transaction is reversed and all account balances are returned to their previous levels.