In a previous blog post on the New Features of QuickBooks 2011 and QuickBooks Enterprise 11, I mentioned the new report that has been added to the Premier and Enterprise versions of QuickBooks.  This feature has been much awaited and we're happy that the feature has been included.  However, for most companies, the report will not be able to be used as expected and will produce a Balance Sheet by Class report with an unclassified column containing many transactions behind the balances. To start, the program does present a warning message the first time the report is run warning about some of the issues associated with the report: Since the Balance Sheet report is a snapshot in time, it relies on all previous transactions prior to the report date to formulate the balance on that day.  For instance, the cash balance shown on the balance sheet report is a culmination of all the payments and deposits within the cash account through the report date.  For this reason, if a class has not been assigned to all transactions in the file, a new QuickBooks file will need to be started, or an adjustment entry will need to be made to assign starting balances to classes as of a specific date. Even after this entry is made, unsupported transactions that will cause an unclassified column on the report include:
  • Journal entries with "unbalanced classes"
  • Payroll transactions with multiple classes
  • Payroll liability payments
  • Sales tax payments
  • Prepayments from customers that are entered into the Receive Payments window
  • Discounts entered in the Receive Payments window
  • Discounts entered in the Pay Bills window
  • Using multiple currencies
  • Paying bills with credit memos assigned to multiple classes
  • Funds transfer window
In addition, when multiple item lines and classes are used on invoices and then the receive payment window is used to apply payments against these invoices, the Balance Sheet by Class report will allocate the class based on a weighted average of the classes used on the original invoice.  This method may suffice for many companies, however if this method does not work for your company, a journal entry will need to be made to reverse out, and then re-enter posting to the correct classes. If you use only one class per transaction and are not affected by the transaction types above, the report may work for you.  We hope that the report will be updated in the future so that all of these transaction types are supported, but are also glad that Intuit has begun working on this much requested feature.