Altering a Service Item in QuickBooks Online

This article addresses the issue of what to do when you discover one of your service items is not booking transactions correctly to your chart of accounts.

Perhaps you reviewed a Profit and Loss report and discovered the following scenario:

• One of your Cost of Goods Sold accounts has a huge negative balance.

A negative balance in a COGS account will have the reverse affect on your Profit and Loss report; instead of a subtraction effect on your report, a negative COGS ( negative expense) will have an addition effect in your report.

There could be various reasons for this scenario, but one of the more common reasons is that one of your service items (or it could be an inventory/non-inventory item as well) is set up incorrectly. More specifically, one or both of the income and expense accounts associated (tied to) the service item in question was not chosen correctly.

This scenario can be especially harmful if this issue has been going on for quite some time, from a very heavily-used service item, and no one noticed this. Please note: if this issue began from an already-closed tax year, you will first need to speak with your CPA to find out what your options are to change the financial data from a tax year that is already closed out.

However, for our purposes in this article, we will assume that we discovered this issue began within a current tax year that has not closed out yet.

So, to fix this current issue AND also fix the already-processed financial data associated with this specific service item issue, let’s begin with the following:

1. Go to your Items List: Gear icon>Lists>Products and Services
2. Assuming you have already discovered the faulty service item: find the service item in question from this list and click on “Edit” on the right side.
3. Once this service item’s profile opens up: scroll down and review (if applicable) both the Income account and Expense account associated (tied to) with this service item.
   1. In our scenario, since the COGS account is being affected with negative data, this means that this COGS account was chosen as our “Income account” within this service item’s profile.
4. To fix: click on the drop-down menu from the Income account field and choose the appropriate income account.
5. Now (very important), once you have chosen your income account, you should immediately (directly below) see a checkbox pop up that is titled “Also update this account in historical transactions. As long as this fix does NOT affect a prior (closed) tax year, go ahead and check mark this box.
6. Not click “Save and close”.

To verify your correction, process the exact same Profit and Loss report and review the new balance of this Cost of Goods Sold account.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.